Reference no: EM133026348

Question - Sydney Ltd incorporated the subsidiary Melbourne Ltd by contributing $800,000 for all the 400,000 issued shares.

Prepare the journal entries for the consolidation worksheet for 30 June 2021. Details of intra-group transactions that are relevant to the consolidation for 30 June 2021 are as follows: Assume an income tax rate of 30%.

(a) Melbourne Ltd pays an annual rent fee of $80,000 to Sydney Ltd at 30 June each year.

(b) On 25 June 2021, Melbourne declared a final dividend of $10,000

(c) During the previous year of 30 June 2020, Sydney Ltd sold inventory to Melbourne Ltd for $15,000, recording a before-tax profit of $5,000. On 1 July 2020, 40% of this inventory was still on hand with Melbourne Ltd.

(d) On 1st June 2021, Sydney Ltd sold inventory to Melbourne Ltd for $30,000 on cash. The original cost of this inventory to Sydney is $20, 000. By 30 June 2021 60% of the inventory was remain unsold.

(e) On 1 July 2019, Melbourne Ltd bought land from Sydney Ltd for $250,000. The land had originally cost Sydney Ltd $240,000. The land remains on hand with Melbourne Ltd at 30 June 2021.