Chapter 08 – Intercompany Indebtedness
P8–25A (continued)
20X7 Downstream Transactions
Total
=
Re-sold
+
Ending
Inventory
Sales
60,000
33,000
27,000
COGS
40,000
22,000
18,000
Gross Profit
20,000
11,000
9,000
Gross Profit %
33.33%
Deferral of This Year’s Unrealized Profits on Inventory Transfers
Sales
60,000
Cost of Goods Sold
51,000
Inventory
9,000
Bond Consolidation Entry:
Bonds Payable
80,000
Bond Premium
1,920
Interest Income
6,600
Investment in Avery Co. Bonds
78,800
Interest Expense
6,080
Investment in Avery Co. Stock
2,730
NCI in NA of Avery Co. Stock
910
$1,920 = ($3,200 / 10 years) x 6 years
$6,600 = ($80,000 x 0.08) + ($1,600 / 8 years)
$78,800 = $78,400 + [($1,600 / 8 years) x 2 years]
$6,080 = ($80,000 x 0.08) – ($3,200 / 10 years)
$2,730 = ($4,160 – $520) x 0.75
$910 = ($4,160 – $520) x 0.25
