Exam 9: Intercompany Inventory Transfers

_____ In 2006, Puzco resold for $70,000 inventory that it had acquired from its 100%-owned subsidiary, Suzco, in 2005 for $50,000. Suzco's cost was $36,000. In consolidation at the end of 2006, which of the following accounts is credited on the worksheet?

_____ (Module 1) At 12/31/05, Pixco, which owns 60% of Sixco, reported intercompany acquired inventory of $18,000 in its balance sheet. Sixco's cost was $14,000. In 2007--two years later--this inventory was resold to outside third parties. Which entry is made in consolidation at 12/31/07?

_____ (Module 1) What is the normal general ledger balance in each of the following accounts, assuming that inventory transfers are above cost?

When a noncontrolling interest exists, intercompany sales on downstream intercompany inventory transfers need be eliminated only to the extent of the non-controlling interest ownership percentage-not 100%.

(Module 1) Pedco sold inventory costing $120,000 to its 80%-owned subsidiary, Sedco, for $150,000 in 2006. Sedco resold most of this inventory for $210,000 in 2005. At 12/31/06, Sedco's balance sheet showed intercompany-acquired inventory on hand of $35,000. Sedco reported $500,000 of net income for 2006. Required: a. Prepare the general ledger entry required at the end of 2006 under the complete equity method. b. Prepare the consolidation entry or entries required at 12/31/06.

Complete the following analysis and prepare the related consolidation entry:

(Module 1) In 2006, Puncor resold for $77,000 inventory that it had acquired from Suncor (an 80%-owned subsidiary) in 2005 for $55,000. Suncor's cost was $44,000. Suncor reported $500,000 of net income for 2006. Required: a. Prepare the general ledger entry required at the end of 2006 under the complete equity method. b. Prepare the consolidation entry or entries required at 12/31/06.

_____ (Module 2) Pakco sold inventory to its 100%-owned subsidiary, Sakco, in 2005 and 2006. At 12/31/05, $24,000 of intercompany profit was deferred in consolidation using the partial equity method. The related inventory was resold to an outside party in early 2006. At 12/31/06, $25,000 of intercompany profit was deferred in consolidation using the partial equity method. At 12/31/06,

(Module 2) Pedco sold inventory costing $120,000 to its 80%-owned subsidiary, Sedco, for $150,000 in 2006. Sedco resold most of this inventory for $210,000 in 2006. At 12/31/06, Sedco's balance sheet showed intercompany-acquired inventory on hand of $35,000. Required: Prepare the consolidation entry or entries required at 12/31/06 under the partial equity method.

(Module 1) In 2005, Sondex, an 80%-owned subsidiary of Pondex, sold inventory to Pondex for $500,000, which includes a markup of 25% on Sondex's cost. At 12/3105, Pondex reported $80,000 of this inventory in its balance sheet. (This inventory was resold in 2006 by Pondex.) In 2006, Sondex sold to Pondex for $800,000 inventory that cost $600,000, of which $640,000 was resold by 12/31/06. Sondex reported $750,000 of net income for 2006. Required: a. Prepare the general ledger entry or entries at 12/31/06 under the complete equity method. b. Prepare the consolidation entry or entries required at 12/31/06.

If an intercompany inventory transfer occurs in 2005 and all this inventory is not resold to an outside, third party until 2006, the intercompany sale is eliminated in consolidation in 2006-not 2005.

In the year end general ledger closing procedures, which accounts are closed in arriving at Cost of Sales?

_____ At 12/31/06, Pozak reported $80,000 of intercompany-acquired inventory in its balance sheet. This inventory was acquired in 2005-not 2006-from its 100%-owned subsidiary, Sozak. Sozak's cost was $60,000. Which of the following accounts is credited in consolidation at 12/31/06?

For the year ended 12/31/06, selected line items from the home office and branch columns of the combining statement worksheet follow: What amount would be reported in the combined column for Cost of Sales?

_____ (Module 1) Which of the following accounts is not eliminated (brought to a zero balance) in the consolidation process?

_____ (Module 1) Which of the following general ledger accounts is not closed out in the year-end closing procedures?

_____ (Module 1) In 2005, Sandex, a 100%-owned subsidiary of Pandex, sold inventory costing $75,000 to Pandex for $120,000. At 12/31/05, Pandex reported $40,000 of this inventory in its balance sheet. For 2005, Sandex reported net income of $500,000, which includes the $45,000 of intercompany profit. In applying the equity method at 12/31/05, Pandex records which amount in its Equity in Net Income of Subsidiary account?

_____ In 2005, Paxco sold inventory for the first time to Saxco, its 100%-owned subsidiary. In consolidation at 12/31/05, the following entry was made: What is the amount of intercompany acquired inventory reported in Saxco's balance sheet at 12/31/05?

(Module 2) Pazda sold inventory costing $40,000 to its 100%-owned subsidiary, Sazda, for $100,000 in 2006. Sazda resold $70,000 of this inventory for $130,000 in 2006. Required: Prepare the consolidation entry or entries required at 12/31/06 under the partial equity method.

_____ (Module 1) At 12/31/05, Pixco, which owns 60% of Sixco, reported intercompany acquired inventory of $18,000 in its balance sheet. Sixco's cost was $14,000. At 12/31/06-one year later-this inventory was still on hand. Which entry is made in consolidation at 12/31/06?