general journal entries

7 47% Individual Assignment 2 - 2021_7b1c78e6d6077af225633c3820977a2b QUESTION 2 - INTRA-GROUP TRANSACTIONS (20 MARKS) White Limited is the only shareholder of Brown Limited. Given below are independent intra-group transactions for the period ending 30"h June, 2019. 1 . During the year ending 30" June, 2019, Brown Limited sold inventory worth $50,000 to White Limited. Brown Limited made profit after tax of $8,000. At 30" June, 2019, White Limited has sold 45% of these goods to Tony and 20% to Sam 2. White Limited sold a depot to Brown Limited for $150,000. This had originally cost White Limited $120,000. The transaction took place on 1" January, 2017. Brown Limited charges depreciation at 5% per annum on straight line basis. 3. On 1" June, 2018, Brown Limited sold inventory costing $15,000 at a mark-up of 40% to White Limited By 30* June 2018, 30% of these inventories were sold to Jacob and the remaining 70% was sold on 2"d July, 2019 to Andrew. 4. On 1" January, 2018, White Limited sold inventory costing $10,000 to Brown Limited at a transfer price of $15,000. On 3" September, 2018, Brown Limited sold half of these inventories back to White Limited, receiving $6,000 from White Limited. Of the remainder kept by Brown Limited, one-third was sold in March, 2019 to Simran at a profit of $5,000. 5. On 1" October, 2018, White Limited issued 1,000 10% debentures of $100 at nominal value. Brown Limited acquired 600 of these debentures. Interest is payable on 31" March and 30" September. Accruals are recognised in the legal entities' accounts. 6. On 1" May, 2018, Brown Limited sold inventory to White Limited for $10,000, recording a before tax profit of $3,000. Half of these inventories were sold by White Limited to John at 30* June, 2018. 7. On " July. 2018, Brown Limited sold a depreciable asset costing $10,000 to White Limited for $18,000. Brown Limited has not charged any depreciation on the asset before the sale. Both entities depreciate assets at 10% per annum Required: Prepare intra-group adjusting journal entries for the year ended 30" June, 2019 assuming an income tax [20 marks] rate of 20% (show all the workings)