A parent provides marketing services to its subsidiary during 2017. The parent c

Question

A parent provides marketing services to its subsidiary during 2017. The parent charged the subsidiary $500,000 for the services. The services cost the parent $400,000 (paid in cash). The companies use service revenue and service expense, as appropriate, to record this transaction and all intercompany charges were still unpaid as of the end of the year. Provide the 2017 entries needed to record both the original transactions and the eliminations necessary for consolidation. Provide entries for Parent, Subsidiary, and the Consolidation worksheet.

Explanation / Answer

Parent books Subsidiary A/c Dr               500,000 Service revenue Cr.                                          500,000 Subsidiary books Marketing Expense Dr.               500,000 Parent A/c Cr.                                          500,000 Elimination entry Service revenue Dr.               500,000 Marketing Expense Cr.                                          500,000 Parent a/c Dr.               500,000 Subsidiary A/c Cr.                                          500,000

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.