Pirate Corporation acquired 85 percent of Ship Company's voting shares of stock in 2007. During 20X8, Pirate purchased 50,000 circuit boards for $15 each and sold 28,000 of them to Ship for $20 each. Ship sold all of the units to unrelated entities prior to December 31, 20X8, for $30 each. Both companies use perpetual inventory systems. Which worksheet consolidating entry is needed in preparing consolidated financial statements for 20X8 to remove all effects of the intercompany sale? a. Sales 560,000 Cost of Goods Sold 560,000b. Sales 650,000 Cost of Goods Sold 650,000c. Cost of Goods Sold 560,000 Sales 560,000d. Cost of Goods Sold 650,000 Sales 650,0001. Option A2. Option B3. Option C4. Option D

Question

Business

Everett Villanueva

28 June, 18:38

Pirate Corporation acquired 85 percent of Ship Company's voting shares of stock in 2007. During 20X8, Pirate purchased 50,000 circuit boards for $15 each and sold 28,000 of them to Ship for $20 each. Ship sold all of the units to unrelated entities prior to December 31, 20X8, for $30 each. Both companies use perpetual inventory systems. Which worksheet consolidating entry is needed in preparing consolidated financial statements for 20X8 to remove all effects of the intercompany sale? a. Sales 560,000 Cost of Goods Sold 560,000b. Sales 650,000 Cost of Goods Sold 650,000c. Cost of Goods Sold 560,000 Sales 560,000d. Cost of Goods Sold 650,000 Sales 650,0001. Option A2. Option B3. Option C4. Option D

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Answers (1)

Know the Answer?

Chloe Weiss · Answer 1

Option A is the correct one

Explanation:

1) This is an entry for removing the inter company sale transaction

2) These are sales for Pirate corporation and cost of goods sold for Ship company (28,000*$20 = $560,000)