Question - Realized Profit on Intercompany Sale

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Question - Realized Profit on Intercompany Sale

Planet Corporation acquired 90 percent of Saturn Company's voting shares of stock in 20X1. During 20X4, Planet purchased 40,000 Playday doghouses for $24 each and sold 25,000 of them to Saturn for $30 each. Saturn sold all of the doghouses to retail establishments prior to December 31, 20X4, for $45 each. Both companies use perpetual inventory systems.

Required -

Give the journal entries Planet recorded for the purchase of inventory and resale to Saturn Company in 20X4.

Give the journal entries Saturn recorded for the purchase of inventory and resale to retail establishments in 20X4.

Give the worksheet consolidation entry(ies) needed in preparing consolidated financial statements for 20X4 to remove all effects of the intercompany sale.

Reference no: EM132655750

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