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Prepare all journal entries required for a worksheet

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Reference no: EM133043446

Question - Additional information provided by group CEO

(a) Kumar Ltd sells certain raw materials to Prasad Ltd to be used in its manufacturing process. At 1 July 2020, Prasad Ltd held merchandise sold to it by Kumar Ltd in the previous year at a profit of $600. During the 2020-21 year, Kumar Ltd sold merchandise to Prasad Ltd for $21,000. None of this was on hand at 30 June 2021.

(b) Prasad Ltd also sells items of merchandise to Kumar Ltd. During the 2020-21 year, Prasad Ltd sold goods to Kumar Ltd for $4,500. At 30 June 2021, merchandise which had been sold to Kumar Ltd at a profit of $300 was still on hand in Kumar Ltd's merchandise.

(c) On 1 July 2020, Prasad Ltd sold an item of equipment to Kumar Ltd for $14,000. This equipment had a carrying amount in the records of Prasad Ltd of $15,000 at time of sale. This type of equipment is depreciated at 10% p.a. on cost.

(d) On 1 January 2020, Kumar Ltd sold an item of merchandise to Prasad Ltd for $18,000. The merchandise had cost Kumar Ltd $16,000. This item was classified by Prasad Ltd as equipment. Equipment of this type is depreciated by Prasad Ltd at 20% p.a.

(e) On 1 March 2021, Prasad Ltd sold an item of equipment to Kumar Ltd. Whereas Prasad Ltd classified this as equipment, Kumar Ltd classified it as merchandise. The sales price was $9,000 which included a profit to Prasad Ltd of $1,500. Kumar Ltd sold this to another entity on 31 March 2021 for $9,900.

Required - Prepare all journal entries required for a consolidation worksheet for the preparation of the consolidated financial statements of Kumar Ltd at 30 June 2021 (narrations not required).

Reference no: EM133043446

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