Plump Corporation holds 60 percent ownership of Slim Company. Each year, Slim purchases large quantities of a gnarl root used in producing health drinks. Slim purchased $150,000 of roots in 20X7 and sold $40,000 of these purchases to Plump for $60,000. By the end of 20X7, Plump had resold all but $15,000 of its purchase from Slim. Plump generated $90,000 on the sale of roots to various health stores during the year. Required: a. Prepare the joumal entries recorded by Plump and Slim during 20X7 relating to the initial purchase, intercorporate sale, and resale of gnarl roots. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Journal entries recorded by Slim Company: Answer is complete and correct. No Event General Journal Debit Credit A 1 Inventory 150,000 Cash (Accounts payable) 150,000 B 2 Cash (Accounts receivable) Sales 60,000 60,000 C 3 Cost of goods-sold Inventory Journal entries recorded by Plump Corporation: 00 40,000 40,000 Answer is complete but not entirely correct. General Journal Debit 60,000 No Event A Inventory Cash (Accounts payable) B 2 Cash (Accounts receivable) Sales C 3 D Cost of goods sold Inventory Income from Slim Investment in Slim 00 00 00 00 9 Credit 60,000 90,000 90,000 45,000 5,000 3 45,000 5,000
Plump Corporation holds 60 percent ownership of Slim Company. Each year, Slim purchases large quantities of a gnarl root used in producing health drinks. Slim purchased $150,000 of roots in 20X7 and sold $40,000 of these purchases to Plump for $60,000. By the end of 20X7, Plump had resold all but $15,000 of its purchase from Slim. Plump generated $90,000 on the sale of roots to various health stores during the year. Required: a. Prepare the joumal entries recorded by Plump and Slim during 20X7 relating to the initial purchase, intercorporate sale, and resale of gnarl roots. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Journal entries recorded by Slim Company: Answer is complete and correct. No Event General Journal Debit Credit A 1 Inventory 150,000 Cash (Accounts payable) 150,000 B 2 Cash (Accounts receivable) Sales 60,000 60,000 C 3 Cost of goods-sold Inventory Journal entries recorded by Plump Corporation: 00 40,000 40,000 Answer is complete but not entirely correct. General Journal Debit 60,000 No Event A Inventory Cash (Accounts payable) B 2 Cash (Accounts receivable) Sales C 3 D Cost of goods sold Inventory Income from Slim Investment in Slim 00 00 00 00 9 Credit 60,000 90,000 90,000 45,000 5,000 3 45,000 5,000
Chapter3: Income Sources
Section: Chapter Questions
Problem 77P: During the last five months of the year, Dwana opens a new Internet telecommunications business...
Related questions
Question
Transcribed Image Text:Plump Corporation holds 60 percent ownership of Slim Company. Each year, Slim purchases large quantities of a gnarl root used in
producing health drinks. Slim purchased $150,000 of roots in 20X7 and sold $40,000 of these purchases to Plump for $60,000. By the
end of 20X7, Plump had resold all but $15,000 of its purchase from Slim. Plump generated $90,000 on the sale of roots to various
health stores during the year.
Required:
a. Prepare the journal entries recorded by Plump and Slim during 20X7 relating to the initial purchase, intercorporate sale, and resale
of gnarl roots.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Journal entries recorded by Slim Company:
Answer is complete and correct.
General Journal
Debit
Credit
150,000
150,000
No
Event
A
1
Inventory
Cash (Accounts payable)
B
2
Cash (Accounts receivable)
Sales
C
3
Cost of goods sold
Inventory
Journal entries recorded by Plump Corporation:
Answer is complete but not entirely correct.
General Journal
No
Event
A
1
Inventory
Cash (Accounts payable)
B
2
Cash (Accounts receivable)
Sales
D
D
3
Cost of goods sold
Inventory
60,000
60,000
40,000
40.000
Debit
Credit
60,000
60.000
90,000
90,000
45.000
45.000
Income from Slim
5,000 ×
Investment in Slim
5.000
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you