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On January 1st 2000 Froto Company acquired 100% of the voting stock of Bilbo Company at book value.
Froto uses the initial value method (cost) and Bilbo doesn't pay any dividends.
On October 1st 2020 Froto sold some merchandise (inventory) to Bilbo company for $1,000,000 credit
the inventory had cost Bilbo $600,000. Both Bilbo and Froto use the perpetual inventory method.
During 2020 Bilbo had sold 70% of the merchandise acquired from Froto for $750,000 but had not paid off Froto
During 2021 Bilbo sold the remaining merchandise for $325,000 and paid off Froto
In 2020 Froto (unconsolidated) reported income of $1,000,000 and Bilbo reported income of $40,000
In 2021 Froto (unconsolidated) reported income of $1,200,000 and Bilbo reported income of $77,000.
| REQUIRED: | | | | | |
| | A)Make Froto's journal entry when it sells the merchandise to Bilbo in 2020 |
| | B) make Bilbo's journal entry when it buys the merchandise from Froto in 2020 |
| | c) make any necessary worksheet entries in 2020 | |
| | d) determine consolidated income for 2020 | | |
| | e) make any necessary worksheet entries in 2021 | |
| | f) make any necessary worksheet entries in 2021 | |
| | g) determine consolidated income for 2021 | | |
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