Parent rnowns 75 percent of the voting common stock of Sub Corporation, acquired at book value during 2011. Selected information from the accounts of Parent rnand Sub for 2012 are as follows:

                                                                                    Parent                  Sub

                        Sales                                                    $1,800             $1,000

                        Cost of sales                                         980                   380

During 2012, Parent rnsold merchandise to Sub for $100,000 at a gross profit to Parent rnof $40,000. Half of this merchandise remained in Sub’s inventory at December 31, 2012. Sub’s December 31, 2011 inventory included unrealized profit of $8,000 on goods acquired from Parent. All of Sub’s inventory that had this unrealized profit of $8 @ December 31, 2011 was sold to outside customers at a large profit during 2012.

Required:

1. Please write out the journal entries to eliminate the effects of intercompany transactions between Parent rnand Sub for 2012.