Virginia Corp

question 19

Essay

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 2012, Virginia made cash sales of $400,000 to Stateside. The gross profit rate was 30% of the selling price. By the end of 2012, Stateside had sold 75% of the goods to outside parties for $420,000 cash.
Prepare any 2013 consolidation worksheet entries that would be required regarding the 2012 inventory transfer.

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Definitions:

Low Rate

An environment characterized by minimal interest, tax, or pricing levels.

Savings

The portion of income not spent on consumption, often put aside for future expenses, investment, or emergencies.

Industrial Revolution

The period of major industrialization that took place during the late 1700s and early 1800s which transformed economies that had been based on agriculture and handicrafts into economies based on large-scale industry, mechanized manufacturing, and the factory system.

Productivity Growth

An increase in the efficiency of producing goods or services within an economy, often leading to more output for the same amount of inputs.