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 $433,440 and $478,800, 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.)

Date	Account Titles and Explanation	Debit	Credit
2014
	(To eliminate intercompany sales)
	(To eliminate intercompany profit in ending inventory)
2015
	(To eliminate intercompany sales)
	(To recognize intercompany profit in beginning inventory realized during the year and reduce controlling and noncontrolling interests for their share of unrealized intercompany profit at beginning of year.)
	(To eliminate intercompany profit in ending inventory)

Perkins Company owns 85% of Sheraton Company. Perkins Company sells merchandise to Sheraton Compa 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 20 Date Account Titles and Explanation Debit Credit 2014 (To eliminate intercompany sales) (To eliminate intercompany profit in ending inventory) 2015 (To eliminate intercompany sales) (To recognize intercompany profit in beginning inventory realized during the year and reduce controlling and noncontrolling interests for their share of unrealized intercompany profit at beginning of year.) (To eliminate intercompany profit in ending inventory) SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT