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Parent Ltd owns all the share capital of Subsidiary Ltd. The following transactions relate to the financial year ended 30 June 2020. The tax rate
Parent Ltd owns all the share capital of Subsidiary Ltd. The following transactions relate to the financial year ended 30 June 2020. The tax rate is 30%.
- During the year ended 30 June 2020, Subsidiary Ltd sold $200,000 worth of inventory to Parent Ltd. Subsidiary Ltd recorded a $40,000 profit before tax on this transaction. Parent Ltd has one-quarter of the inventory still on hand at the end of the financial year.
- On 25 June 2020, Parent Ltd declared a dividend of $40,000. On the same day Subsidiary Ltd declared a $20,000 dividend.
- On 1 December 2019, Subsidiary leased surplus office space to Parent, at a rental payment of $18,000 per month. Rent is payable half-yearly in advance, on 1 December and 1 June each year.
Requirement:
Prepare the Consolidation Journal entries for the financial year ended 30 June 2020. [Narrationsare NOTrequired].
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