(Module 1) in 2005, Sondex, an 80%-Owned Subsidiary of Pondex

Essay

(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.