Homework Answers
| Transaction | General Journal | Debit | Credit | |
| 1 | Investment Income | $ 7,020 | ||
| To Investment in Schilling | $ 7,020 | |||
| Workings: | ||||
| Inventory sold to Schilling | = | $ 2,30,000 | ||
| Less: | Cost of goods sold | = | $ 1,61,000 | |
| Gross profit | = | $ 69,000 | ||
| Gross profit ratio | = | Gross profit / Selling price | ||
| = | $69000 / 230000 | |||
| = | 30% | |||
| Share of Timberend | = | 20% | ||
| Remaining Inventory at the end | = | $230000 - $113000 | ||
| = | $ 1,17,000 | |||
| Unrealized Intra entity gross profit | = | ($117000 X 30%) X 20% | ||
| = | $ 7,020 | |||
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