Harris Enterprises owns 100% of the outstanding stock of Staton Company. The following transactions occurred during 2X13:
a) Harris Enterprises sold inventory costing $2,750 on account to Staton Company for $3,800. As of year-end, the amount due had not been paid. Harris Enterprises and Staton Company use a perpetual inventory system.
b) Staton Company borrowed $8,000 from Harris Enterprises on December 31, 2X13, and signed a 2-year note.
For each item, prepare the necessary intercompany elimination entry that is needed, if at all, in order to prepare a year-end consolidated balance sheet. Be certain to specifically identify whether an account is on the books of Harris Enterprises or Staton Company.
a. Accounts Payable, Staton 3,800
Accounts Receivable, Harris 3,800
Sales Revenue, Harris 3,800
Cost of Goods Sold, Harris 2,750
Inventory, Staton 1,050
b. Note Payable, Staton 8,000
Note Receivable, Harris 8,000
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