PART I: INTRA-ENTITY INVENTORY TRANSFER

Pit Corporation owns 85% of Stop Companys outstanding common stock. On 07/01/18, Pit sold inventory to Stop in exchange for $560,000 cash. Pits cost of the inventory was $420,000.

On 12/18/18, Stop sold 60% of the inventory to 3rd parties at a cash price of $448,000. The other 40% of the inventory remains on hand at 12/31/18.

Prepare below the journal entries prepared by Pit and Stop during 2018 : PIT STOP

Required:

Prepare the 12/31/18 consolidation worksheet entry related to these transactions. : BE SURE TO CLEARLY SHOW YOUR WORK IN ORDER TO GET CREDIT FOR YOUR ANSWERS.

WE HAVE: WE NEED: ADJUSTMENT(AS IF)

WHICH LEADS TO.......

WE HAVE:

WE NEED:

			Combined	Consolidated
Account	P's G/L	S's G/L	G/L Bals	Amounts

			Combined	Consolidation Entries		Consolidated
Account	P's G/L	S's G/L	G/L Bals	debit	credit	Amounts

2

PART II: INTRA-ENTITY DEPRECIABLE ASSET TRANSFER

Pit Corporation owns 85% of Stop Companys outstanding common stock. On 01/01/18, Pit sold a used piece of equipment to Stop in exchange for $275,000 cash. Pits original cost of the equipment was $820,000 and accumulated depreciation at 01/01/18 was $610,000. The remaining life of the equipment is 5 years, and Stop will use that same useful life. Both companies use the straight-line method of depreciation.

Prepare below are the journal entries prepared by Pit and Stop during 2018 PIT STOP

Required:

Prepare the 12/31/18 consolidation worksheet entry related to these transactions. BE SURE TO CLEARLY SHOW YOUR WORK IN ORDER TO GET CREDIT FOR YOUR ANSWERS.

WE HAVE: WE NEED:(AS IF)

WHICH LEADS TO.......

WE HAVE:

ADJUSTMENT

			Combined	Consolidated
Account	P's G/L	S's G/L	G/L Bals	Amounts

WE NEED:

			Combined	Consolidation Entries		Consolidated
Account	P's G/L	S's G/L	G/L Bals	debit	credit	Amounts