Homework Answers
Answer:
Requirements (a&b)
| Conversion from markup on cost to gross profit rate | |
| Markup (given as a percentage of cost) | 25% |
| Convert to gross profit rate [0.25/(1.00+0.25)] | 20% |
| Non controlling interest share of consolidated net income | |
| Reported net income of subsidiary -2018 | 290000 |
| 2017 intra entity gross profit recognized in 2018 (350000*30%*20%) | 21000 |
| 2018 intra entity gross profit deferred (450000*30%*20%) | (27000) |
| Adjusted net income of subsidiary-2018 | 284000 |
| Outside ownership 20% | |
| Non controlling interest share of consolidated net income | 56800 |
Requirements(c)
journal entry
| Date | Transaction | Debit | Credit |
| Prepare entry (G) | |||
| 1. | Retained earnings | 21000 | |
| Cost of good sold | 21000 | ||
| Prepare entry (TI) | |||
| 2. | Sales | 450000 | |
| Cost of good sold | 450000 | ||
| Prepare entry (G) | |||
| 3. | Cost of good sold | 27000 | |
| Inventory | 27000 | ||
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