Exercise 6-8

Perkins Company owns 85% of Sheraton Company. Perkins Company sells merchandise to Sheraton Company at 20% above cost. During 2014 and 2015, such sales amounted to $454,680 and $475,200, respectively. At the end of each year, Sheraton Company had in its inventory one-third of the amount of goods purchased from Perkins during that year. Assume that the sales were upstream instead of downstream. Prepare the workpaper entries necessary to eliminate the effects of the intercompany sales for 2014 and 2015. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)