subject: company accounting
Consolidation
Indigo Ltd gives $55 000 as an interest-free loan to VioletLtd on 1 July 2019. Violet Ltd made a $20 000 repayment by 30 June2020.Violet Ltd owns all the share capital of Indigo Ltd. Thefollowing transactions are independent:
- Indigo Ltd rented a spare warehouse to Violet Ltdstarting from 1 July 2019 for 1 year. The total charge for therental was $3 500, and Violet Ltd paid half of this amount toIndigo Ltd on 1 January 2020 and the rest on 1 July2020.
- During March 2020, Indigo Ltd declared a $5000dividend. The dividend was paid in August 2020.
Required
In relation to the above intragrouptransactions:
1. Prepareadjusting journal entries for the consolidation worksheet at 30June 2020.
2. Explain indetail why you made each adjusting journal entry.
