Virginia Corp

question 94

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 2010, Virginia made cash sales of $400,000 to Stateside. The gross profit rate was 30% of the selling price. By the end of 2010, 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 2010.

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Definitions:

UCC

The United States has implemented the Uniform Commercial Code, a wide set of legal principles, to govern commercial exchanges.

Consideration

In contract law, something of value given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances.

Valid Consideration

A component of contract law that ensures all parties involved agree to give or do something of value in exchange for a benefit.

Bilateral Contract

A promise exchanged for a promise.