Prince Company owns 104,000 of the 130,000 shares outstanding of Serf Corporation. Serf Corporation sold equipment to Prince Company on January 1, 2017 for $740,000. The equipment was originally purchased by Serf Corporation on January 1, 2016 for $1,280,000 and at that time its estimated depreciable life was 8 years. The equipment is estimated to have a remaining useful life of four years on January 1, 2017. Both companies use the straight-line method to depreciate equipment. In 2018 Prince Company reported net income from its independent operations of $3,270,000, and Serf Corporation reported net income of $820,000 and declared dividends of $60,000. Prince Company uses the cost method to record the investment in Serf Company. Required: A. Prepare, in general journal form, the workpaper entries relating to the intercompany sale of equipment that are necessary in the December 31, 2018 consolidated financial statements workpapers.
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Prince Company owns 104,000 of the 130,000 shares outstanding of Serf Corporation. Serf Corporation...
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