Question - Trump Corporation sold $180,000 in inventory to Bannon Enterprises during 2017, for $270,000. Bannon resold $108,000 of this merchandise in 2017 with the remainder to be disposed of during 2018.
Required -
1. Assuming Trump owns 25% of Bannon and applies the equity method, prepare the journal entry Trump should have recorded at the end of 2017 to defer gross profit on infra-entity inventory sales.
2. What entry would Trump record in 2018 assuming the remainder was disposed during 2018?