Sketchy Shoes is a subsidiary of Pacific Brands. Pacific routinely sells merchandise to Sketchy at a $25\%$ markup on cost$.$

Information on intercompany merchandise transactions is below $($in thousands$)$:

Required

a$.$ Prepare the working paper eliminating entries related to these intercompany transactions at December $31,2017.$

Enter answers in thousands.

b$.$ Assume Sketchy sold merchandise acquired from Pacific Brands for $$240,000$ during $2017.$ What amounts appear

on the separate books of Pacific Brands and Sketchy Shoes, relating to the intercompany merchandise transactions,

for sales revenue and cost of goods sold? What are consolidated sales and cost of goods sold? Show how the

eliminating entries in part a above adjust the balances reported on the separate books of the two entities to the

correct consolidated balances.

Remember to use negative signs with your credit balance answers in the $Dr(Cr)$ columns.