Problem - On January 1, 2000 skywalker company purchased all of the outstanding stock of solo company at book value which it accounts for using the initial value method.
In 2016 skywalker company sold inventory to solo company for $1,000,000 cash. This merchandise had cost skywalker $400,000. In 2016 solo had not sold any of that merchandise.
In 2017, solo sold 60% of the merchandise acquired from skywalker for $1,000,000.
In 2018 solo sold the remaining 40% of the merchandise acquired from skywalker for $500,000.
Solo does not pay dividends
Required:
A) Prepare the journal entry skywalker makes in 2016 when it sells the inventory to solo...skywalker uses perpetual inventory.
B) Prepare the journal entry solo makes in 2016 when it buys the inventory from skywalker...solo also uses perpetual inventory.
C) Prepare the journal entry solo makes in 2017 when it sells the merchandise.
D) Prepare the journal entry solo makes in 2018 when it sells the merchandise.
E) Prepare any worksheet entries needed in 2016 with respect to this inventory transaction.
F) Prepare any worksheet entries needed in 2017 with respect to this inventory transaction.
G) Prepare any worksheet entries needed in 2018 with respect to this inventory transaction.
H) In 2016 skywalker reported unconsolidated income of $4,500,000 while solo reported income of $300,000 what was consolidated income in 2016?
I) In 2017 skywalker reported unconsolidated income of $5,000,000 and solo reported income of $100,000 what was consolidated income in 2017?
J) In 2018 skywalker reported unconsolidated income of $3,800,000 and solo reported income of $600,000. What was consolidated income in 2018?
K) On January 1, 2016 skywalker showed retained earnings of $8,000,000. Skywalker does not pay any dividends. What was skywalker unconsolidated and consolidated retained earnings on: 12/31/16 12/31/17 and 12/31/18?