In preparing the consolidation worksheet for Pencil Corporation and its 60 percent–owned subsidiary, Stylus Company, the following consolidation entries were proposed by Pencil's bookkeeper: Worksheet Entries Debit Credit
Cash 87,000
Accounts Payable 87,000
To consolidate the unpaid balance for intercorporate inventory sales in 20X5.
Cost of Goods Sold 16,200
Income from Subsidiary 16,200

To consolidate unrealized inventory profits at December 31, 20X5.
Income from Subsidiary 189,000
Sales 189,000

To consolidate intercompany sales for 20X5.

Bolger's bookkeeper recently graduated from Oddball University, and although the dollar amounts recorded are correct, he had some confusion in determining which accounts needed adjustment. All intercorporate sales in 20X5 were from Feldman to Bolger, and Feldman sells inventory at cost plus 40 percent of cost. Bolger uses the fully adjusted equity method in accounting for its ownership in Feldman.

Required:
a. What percentage of the intercompany inventory transfer was resold prior to the end of 20X5?
b. Prepare the appropriate consolidation entries needed at December 31, 20X5, to prepare consolidated financial statements.

Presented below is a list of possible transactions. analyze the effect of the 18 transactions on the financial statement categories indicated. transactions assets liabilities owners’ equity net income 1. purchased inventory for $80,000 on account (assume perpetual system is used). 2. issued an $80,000 note payable in payment on account (see item 1 above). 3. recorded accrued interest on the note from item 2 above. 4. borrowed $100,000 from the bank by signing a 6-month, $112,000, zero-interest-bearing note. 5. recognized 4 months’ interest expense on the note from item 4 above. 6. recorded cash sales of $75,260, which includes 6% sales tax. 7. recorded wage expense of $35,000. the cash paid was $25,000; the difference was due to various amounts withheld. 8. recorded employer’s payroll taxes. 9. accrued accumulated vacation pay. 10. recorded an asset retirement obligation. 11. recorded bonuses due to employees. 12. recorded a contingent loss on a lawsuit that the company will probably lose. 13. accrued warranty expense (assume expense warranty approach). 14. paid warranty costs that were accrued in item 13 above. 15. recorded sales of product and related service-type warranties. 16. paid warranty costs under contracts from item 15 above. 17. recognized warranty revenue (see item 15 above). 18. recorded estimated liability for premium claims outstanding.