McGraw Corp

question 75

Essay

McGraw Corp.owned all of the voting common stock of both Ritter Co.and Lawler Co.During 2018, Ritter sold inventory to Lawler.The goods had cost Ritter $65,000, and they were sold to Lawler for $100,000.At the end of 2018, Lawler still held 30% of the inventory.
Required:
How should the sale between Lawler and Ritter be accounted for in a 2018 consolidation worksheet? Show worksheet entries to support your answer.

---

Definitions:

Specific Warranty Deed

A legal document that transfers real estate ownership, guaranteeing the property is free from claims and liens only during the grantor's ownership.

General Warranty Deed

A legal document transferring property ownership that guarantees the seller holds clear title and assumes responsibility for any title defects.

Restrictive Covenants

Legal agreements tied to a property that restrict the actions property owners can take, often used in employment contracts and real estate.

Neighborhood Conformity

The phenomenon where properties within a certain area tend to show uniformity in terms of appearance, value, and use due to similar societal or zoning pressures.