Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Answear A and B. On January 1, 2020, Pioneer Company purchased 80% of the common stock of Shipley Company for $600,000. On this date, Shipley's
Answear A and B.
On January 1, 2020, Pioneer Company purchased 80% of the common stock of Shipley Company for $600,000. On this date, Shipley's stockholders' equity consisted of the following: Common stock Other contributed capital Retained earnings $220,000 90,000 320,000 Any difference between implied and book value relates to equipment (10-year remaining useful life). During 2020, Shipley distributed a dividend in the amount of $10,000 and at year-end reported a $180,000 net income. Pioneer Company uses the equity method to record its investment. During 2020 Pioneer sold $100,000 of goods (inventory) to Shipley on account. The cost of the inventory was $60,000 at the date of the transfer. During the year, Shipley sold 50 percent of the inventory to external customers (3rd parties) at a 20 percent markup on cost. Use and Due from Subsidiary and Due to Parent for the intercompany receivable / payable. Instructions: A. Prepare the 2020 journal entries only relating to inventory transactions of Pioneer B. Prepare the 2020 consolidation worksheet entries only relating to inventory transactions Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started