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    Consolidated Net Income - Journal Entries

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    2. On January 1, 2003, Musial Corp. sold equipment to Martin Inc. (a wholly-owned subsidiary) for $168,000 in cash. The equipment had originally cost $140,000 but had a book value of only $98,000 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense was calculated using the straight-line method.

    Musial earned $308,000 in net income in 2003 (not including any investment income) while Martin reported $126,000. Assume there is no amortization related to the original investment.

    Required:
    What is consolidated net income for 2003?

    3. A U.S. company executed a series of transactions in a foreign country during 2004. The appropriate exchange rates during 2004 were as follows:

    Exchange
    Date Rate
    June 1, 2004 $.62 = §1
    August 1, 2004 $.66 = §1
    October 1, 2004 $.72 = §1
    November 1, 2004 $.77 = §1
    December 31, 2004 $.78 = §1

    The following transactions occurred during 2004:

    June 1 Bought inventory of §20,000 on credit.
    Aug. 1 Sold all inventory for §30,000 on credit.
    Oct. 1 Paid §10,000 on the June 1 purchase.
    Nov. 1 Collected §10,000 from the August 1 sale.

    Required:
    Prepare all journal entries in U.S. dollars along with any December 31, 2004 adjusting entries.

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    https://brainmass.com/business/foreign-exchange-rates/consolidated-net-income-journal-entries-133237

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    Solution Summary

    On January 1, 2003, Musial Corp. sold equipment to Martin Inc. (a wholly-owned subsidiary) for $168,000 in cash. The equipment had originally cost $140,000 but had a book value of only $98,000 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense was calculated using the straight-line method.

    $2.49

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