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Problem 6 - 2 0 ( Algo ) Correction of Consolidation Entries LO 6 - 4 In preparing the consolidation worksheet for Pencil Corporation and
Problem Algo Correction of Consolidation Entries LO
In preparing the consolidation worksheet for Pencil Corporation and its percentowned subsidiary, Stylus Company, the following
consolidation entries were proposed by Pencil's bookkeeper:
To eliminate the unpaid balance for intercorporate inventory sales in
To eliminate unrealized inventory profits at December
To eliminate intercompany sales for
Pencil's bookkeeper recently graduated from Oddball University, and although the dollar amounts recorded are correct, he had some
confusion in determining which accounts needed adjustment. All intercorporate sales in X were from Stylus to Pencil, and Stylus
sells inventory at cost plus percent of cost Pencil uses the fully adjusted equity method in accounting for its ownership in Stylus.
Required:
a What percentage of the intercompany inventory transfer was resold prior to the end of
Note: Do not round your intermediate calculations. Round your final answer to nearest whole percentage.
Intercompany inventory
b Prepare the appropriate consolidation entries needed at December to prepare consolidated financial statements.
Note: If no entry is required for a transactionevent select No journal entry required" in the first account field. Do not round
intermediate calculations.
Consolidation
Worksheet Entries
A Record the entry to eliminate intercompany receivablepayable
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