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Patsy Company sells merchandise to Simon Company at a markup of 30% of selling price. During 2019 and 2020 such sales amounted to $300,000 and $480,000, respectively. At the end of each year, Simon Company had in its inventory one-tenth of the amount of goods purchased from Patsy Company during that year.
Required:
Problem 1: Create, in general journal form, all entries necessary on the 12/31/2020 consolidated statements workpaper to eliminate the effects of intercompany sales.
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