On 1 July 2018, River Ltd acquired 90% of the share capital togain control of Creek Ltd. The following intra-group transactionsoccurred during the year ending 30 June 2019.
- During the 2018 - 2019 period, River Ltd sold inventory toCreek Ltd for $2,000,000. River Ltdpurchased this inventory for $1,700,000. By 30 June 2019, Creek Ltdhas 30% of that inventory still on hand as unsold.
- Creek Ltd declared a final dividend of $1,500,000 from currentyear’sprofits.
- Creek Ltd paid Water River Ltd, a consultancy fee of $70,000during theyear.
- River Ltd provided a loan of $10,000,000 to Creek Ltd. The loancharges 5% interest
annually. One half of the interest for the current year remainsunpaid as at
30 June 2019. - Creek Ltd sold land to River Ltd for $1,350,000. The land waspurchased by Creek Ltd for $600,000.
Prepare the journal entries required to eliminate theintra-group transactions noted above.
