Virginia Corp. owned all of the voting common stock of Stateside Co. Both companies use the perpetual inventory method, and Virginia decided to use the partial equity method to account for this investment. During 2017, Virginia made cash sales of $400,000 to Stateside. The gross profit rate was 30% of the selling price. By the end of 2017, Stateside had sold 75% of the goods to outside parties for $420,000 cash.Prepare journal entries for Virginia and Stateside to record the sales/purchases during 2017.
What will be an ideal response?
| On the books of Virginia: | ||
| Cash | 400,000 | |
| Sales | 400,000 | |
| Cost of Goods Sold ($400,000 × 70%) | 280,000 | |
| Inventory | 280,000 | |
| On the books of Stateside: | ||
| Inventory | 400,000 | |
| Cash | 400,000 | |
| Cash | 420,000 | |
| Sales | 400,000 | |
| Cost of Goods Sold | 300,000 | |
| Inventory | 300,000 | |
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