Brandy Corporation owns 60 percent of Downer’s voting shares. During 20X3, Brandy produced 50,000 computer desks at a cost of $82 each and sold 20,000 of them to Draw for $94 each. Downer sold 14,000 of the desks to unaffiliated companies for $130 each prior to December 31, 20X3, and sold the remainder in early 20X4 for $140 each. Both companies use perpetual inventory systems. Tax rate is 30 percent.
(a) What amounts of cost of goods sold did Brandy and Downer record in 20X3?
(b) What amount of cost of goods sold must be reported in the consolidated income statement for 20X3?
(c) Prepare the necessary journal entry to eliminate the intra-gorup sales and cost of goods sold.
York Ltd. was registered on 1 July 2020. The next day, the directors issued a disclosure document inviting applicants for 700,000 ordinary shares with an issue price of $1. The shares were payable 20¢on application and 40¢ on allotment. By the end of July, the company had received exactly 700,000 applications, together with the correct application monies. The directors allotted these shares on 1 August. The correct allotment monies were received by the end of September. On 1 October 2020, the directors made a call of 25¢ per share. Call monies were due and payable by 31 October, and were received by then except in respect of one parcel of 10,000 shares.
(b) Prepare an extract from the balance sheet as at 31 October 2020, showing owners’ equity
The income statement of Price Ltd for the year ended 31 December 2020, reported the following condensed information:
Revenue from fees $600,000
Operating expenses 360,000
Income from operations 240,000
Income tax expense 60,000
i. Cash receipts from customers.
ii. Cash payments for operating expenses.
(b) Prepare the operating activities section of the statement of cash flows for 2020.
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