08-23-2010, 01:27 PM
Hi....I need your help; those who good with journal entries, kindly help
a) In May 2010, the company sold a machine to its subsidiary (for eg. $100) and treat the transaction as capital injection, hence journal entry created is
Dr. Investment $100
Cr. Internal Sales $100
Dr. Cost of Good Sold $100
Cr. Inventory $100
b) The machine has been shipped out to subsidiary and subsidiary has also taken into account with journal created
Dr. Assets
Cr. Share of Capital
c) However, up until today, the machine is still 'hanging' in subsidiary's country and they need time to clear the custom. Both party still cannot recognize and treat the transaction as capital injection due to custom clearance issues. Because August 2010 is the company financial closing year, I need to reverse journal entries created above.
My questions are
1. Is the journal entry created in item a) above is correct?
2. What entries to book the reverse journal? Is it Dr. Subsidiary Investment, Cr. Inventories?
3. Should I also reverse the entries of Dr. Sales, Cr. COGS?
Your help will be highly appreciated.
Thank you so much!
Best Regards,
Irene
a) In May 2010, the company sold a machine to its subsidiary (for eg. $100) and treat the transaction as capital injection, hence journal entry created is
Dr. Investment $100
Cr. Internal Sales $100
Dr. Cost of Good Sold $100
Cr. Inventory $100
b) The machine has been shipped out to subsidiary and subsidiary has also taken into account with journal created
Dr. Assets
Cr. Share of Capital
c) However, up until today, the machine is still 'hanging' in subsidiary's country and they need time to clear the custom. Both party still cannot recognize and treat the transaction as capital injection due to custom clearance issues. Because August 2010 is the company financial closing year, I need to reverse journal entries created above.
My questions are
1. Is the journal entry created in item a) above is correct?
2. What entries to book the reverse journal? Is it Dr. Subsidiary Investment, Cr. Inventories?
3. Should I also reverse the entries of Dr. Sales, Cr. COGS?
Your help will be highly appreciated.
Thank you so much!
Best Regards,
Irene