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:

Mechanics Lien

A legal claim against a property by a contractor or worker for unpaid labor or materials provided on a construction project, ensuring payment is received.

Payment

The transfer of funds or assets from one party to another as fulfillment of a financial obligation.

Construction

The process of building or assembling infrastructure, buildings, or other substantial physical structures.

New Home

A dwelling that has never been lived in before, typically freshly constructed or in the process of being built.