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Create necessary consolidation journal entries for rip ltd

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Reference no: EM133007405

Rip Ltd acquired all of the share capital in Curl Ltd. The following intra-group transactions are relevant to the consolidation for the year ended 30 June 2021:

  • Rip Ltd provided management services to Curl Ltd for $40,000.
  • Curl Ltd provided Rip Ltd with a loan of $100,000 on 1 July 2020. Rip Ltd has paid interest of 10% during the year.
  • During the year, Rip Ltd sold inventories to Curl Ltd for $500,000, which had originally cost Rip Ltd $420,000. On 30 June 2021, half of these inventories remained in Curl Ltd's books. At the year-end, Curl Ltd still owed Rip Ltd $100,000 for the purchase of inventories.
  • Curl Ltd declared and paid $25,000 of dividends.
  • Rip Ltd acquired a piece of land from Curl Ltd for $800,000 cash. Before the transfer, the land value in the accounting records of Curl Ltd was $600,000.

Assume the company tax rate is 30%.

Required:

Problem 1: Create the necessary consolidation journal entries for Rip Ltd group for the year ended 30 June 2021 regarding these intra-group transactions and balances.

Reference no: EM133007405

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