Novatal Corporation owns 90% of Xerox Company's outstanding common stock. On 08/28/20, Novatal sold inventory to Xerox in exchange for $650,000 cash. Novatal has purchased the inventory pn 05/02/20 at a cost of $520,000.

On 12/20/20, Xerox sold 75% of the inventory to 3rd parties at a cash price of $609,375. The other 25% of the inventory remains on hand at 12/31/20.

Novatal journal entries would include:

To acquire the Inventory

Debit to Inventory and credit to Cash ...?

Debit to Cash and credit to Sales ...?

Debit to COGS and credit to Inventory ...?

Xerox journal entries would include:

To purchase the Inventory from Novatal

Debit to Inventory and credit to Cash ...?

To sell the Inventory to outside customers

Debit to Cash and credit to Sales ...?

Debit to COGS and credit to Inventory ...?