Prepare the consolidation entries necessitated

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Question - A Company holds 80% of B Company stock. In the current year A Company reports sales of $800,000 and cost of goods sold $600,000. For the same period, B Company has sales of $400,000 and cost of goods sold of $280,000. In the prior year, A Company sold inventory to B Company for $100,000, which cost A Company $75,000. B Company had $20,000 of this inventory on hand at year end. During the current year, A Company sold inventory to B Company for $120,000, which cost A Company $96,000. At year end B Company possesses 40% of the inventory. A Company had established the transfer price on its normal gross profit rate.

Required - Prepare the consolidation entries necessitated by the intra-company sales.

Reference no: EM132494369

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