Reference no: EM131824548
On 1/1/2000 sanders company purchased all of the stock of clinton company at book value. On 12/1/2014 sanders sold merchandise to clinton. This merchandise was sold on credit for $400,000 and had cost sanders $160,000. At the end of 2014 none of this inventory had been sold and the obligation had not been paid.
In 2015 clinton sold ¾ of this merchandise for $325,000 and paid off the account payable
In 2016 clinton sold the remainder of this merchandise for $108,000.
The income statements for 2014, 2015 and 2016 are as follows:
2014
SANDERS CLINTON
SALES $5,000,000 $1,000,000
COGS $3,000,000 $400,000
G/P $2,000,000 $600,000
INVEST INC. 600,000 0
INCOME $2,000,000 $600,000
[note: SANDERS uses partial equity for investment in CLINTON]
2015
SANDERS CLINTON
SALES $5,000,000 $1,000,000
COGS $3,000,000 $400,000
G/P $2,000,000 $600,000
INVEST INC. 600,000 0
INCOME $2,000,000 $600,000
[note: SANDERS uses partial equity for investment in CLINTON]
2016
SANDERS CLINTON
SALES $5,000,000 $1,000,000
COGS $3,000,000 $400,000
G/P $2,000,000 $600,000
INVEST INC. 600,000 0
INCOME $2,000,000 $600,000
REQUIRED:
1) Make the entry SANDERS makes when it sells the merchandise to CLINTON in 2014
2) Make the entry CLINTON makes when it buys the merchandise
3) Make the necessary worksheet entries needed in 2014 connected with the inventory transaction
4) Prepare a 2014 consolidated income statement
5) Prepare the entry CLINTON makes when it pays SANDERS in 2015
6) Make the entry CLINTON makes when it sells the merchandise acquired from SANDERS in 2015
7) Make the necessary worksheet entries needed in 2015 connected with inventory
8) Prepare a 2015 consolidated income statement
9) Make the necessary worksheet entries needed in 2016 connected with inventory
10) Prepare a 2016 consolidated income statement
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