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Create adjusting journal entry for consolidation worksheet

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Reference no: EM132974233

Keymax Ltd owns all the share capital of Argyle Ltd. The income tax rate is 30%. During the period ended 30 June 2021, the following transactions took place:

(i) Argyle Ltd sold inventories costing $50,000 to Keymax Ltd. Argyle Ltd recorded a $10,000 profit before tax on these transactions. At 30 June 2021, Keymax Ltd has none of these goods still on hand.

(ii) Keymax Ltd sold inventories costing $12,000 to Argyle Ltd for $18,000. By 30 June 2021, one-third of these were sold to Warton Ltd for $9,500 and one-third to Laverton Ltd for $9,000; the rest are still on hand with Argyle Ltd. Warton Ltd and Laverton Ltd are external entities.

(iii) On 1 January 2021, Keymax Ltd sold land for cash to Argyle Ltd at $20,000 above cost. The land is still on hand with Argyle Ltd.

(iv) Argyle Ltd sold a warehouse to Ice Enterprises Ltd for $100,000 on 1 July 2020. The carrying amount of this warehouse recognised by Argyle Ltd at the time of sale was $82,000. Keymax Ltd charges depreciation at a rate of 5% p.a. on cost.

Required:

Problem 1: Prepare adjusting journal entries for the consolidation worksheet at 30 June 2021.

Reference no: EM132974233

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