Unrealized Profits in Prior Year

Pond Corporation holds $75$ percent of the voting shares of Spring Services Company. During $20$X$7,$ Pond sold inventory

costing $$60,000$ to Spring Services for $$90,000,$ and Spring Services resold one$-$third of the inventory in $20x7.$ The remaining

inventory was resold in $20$X$8.$ Also in $20$X$7,$ Spring Services sold land with a book value of $$140,000$ to Pond for $$240,000.$

Pond continues to hold the land at the end of $20$X$8.$ The companies file separate tax returns and are subject to a $40$ percent tax

rate.

Required

Give the consolidation entries relating to the intercorporate sale of inventories and land needed in the consolidation worksheet

at the end of $20$X$8.$ Assume that Pond uses the equity method in accounting for its investment in Spring Services.