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What consolidation entries to eliminate intragroup sale are

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Reference no: EM132543515

Question 1: Party Ltd owns all of the shares in Sunny Ltd. On 15 April 2020, Party Ltd sold inventories to Sunny Ltd for $68,000. The inventories had previously cost Party Ltd $60,000. All the inventories are still held by Sunny Ltd at the reporting date on 30 June 2020. Ignoring tax effects, the consolidation entries to eliminate this intragroup sale are:

Option a. Cash Dr 60,000 Sales revenue Cr 60,000 Cost of sales Dr 60,000 Inventories Cr 60,000

Option b. Sales revenue Dr 60,000 Cash Cr 60,000 Inventories Dr 60,000 Cost of sales Cr 60,000

Option c. Sales revenue Dr 68,000 Cost of sales Cr 8,000 Inventories Cr 60,000

Option d. Sales revenue Dr 68,000 Cost of sales Cr 60,000 Inventories Cr 8,000

Reference no: EM132543515

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