LO 1: Describe the accounting for intercompany sales of inventory between the parent and the subsidiary when the parent uses the equity method of pre-consolidation investment bookkeeping. (pg. 186) e Marked out of 20.00 Flag question Computing the amount of equity income and preparing [U) consolidation journal entries Assume that a wholly owned subsidiary sells inventory to the parent company. The parent company, ultimately, sells the inventory to customers outside of the consolidated group. You have compiled the following data for the years ending 2012 and 2013: Income Profit % 2013 S500.000 $75,000 28% 2012 $400,000 $50,000 26% Sales End of Year (Payable) 10% 9% $20,000 Assume that inventory not remaining at the end of the year was sold outside of the consolidated group during the year. Assume the company uses the full equity method to account for its subsidiary. parent a. How much Equity Income should the parent report in its pre-consolidation income statement the year equity method of accounting for its Equity Investment? 2013 b. Prepare the required [0] consolidation journal entries for 2013 Consolidation Worksheet Ask me anything