Q$1.$ The following information extracted from the parent company

a$.$ Parent company loaned $$1000$ to Subsidiary with an interest rate of $5\%.$

b$.$ Parent company made a sale to Subsidiary for $$500$ cash. The inventory had originally cost Parent company $$200.$ Subsidiary then sold that same inventory to an outsider for $$700.$

c$.$ Parent company made a sale to Sub for $$800$ cash. The inventory had originally cost Parent $$300.$ Subsidiary has not yet sold that same inventory to an outsider.

Required:

Pass the elimination entries for the intercompany transactions.

Answer:

Q$2.$ The partnership of Ibrahim and Rawan has the following provisions:

$$ Ibrahim and Rawan receive salary allowances of SAR $50,000$ and SAR $15,000,$ respectively.

$$ Interest is imputed at $5\%$ on the average capital investment.

$$ Any remaining profit or loss is shared between Ibrahim and Rawan in a $3$:$1$ ratio, respectively.

$$ Average Capital investments: Ibrahim, SAR $300,000$; Rawan, SAR $150,000$

$$ Net income SAR $300,000$

Required: pass journal entry to allocate the profit between Ibrahim and Rawan