Plateau Incorporated Bought 60% of the Common Stock of Sachet

Essay

Plateau Incorporated bought 60% of the common stock of Sachet Company several years ago.At the time of purchase,the fair value and book value of Sachet's net assets were equal.The cost of the 60% investment was equal to 60% of the book value of Sachet's net assets.Plateau sells merchandise to Sachet at 125% above Plateau's cost.Intercompany sales from Plateau to Sachet for 2014 were $60,000.Unrealized profits in Sachet's December 31,2013 inventory and December 31,2014 inventory were $6,000 and $4,500,respectively.Sachet reported net income of $120,000 for 2014.
Required: In General Journal format,prepare consolidation working paper entries at December 31,2014 to eliminate the effects of the intercompany inventory sales.