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I have correctly calculated the PUP in questions 1 to 10 but I got the answers for the journal entry part in questions 3, 4 and 8 wrong.
My answers:
qns 3: Dr H’s retained earnings
qns 4: Dr S’s retained earnings
qns 8: Dr S’s retained earningsThe answers sheets says, all of the answers for the above questions are Dr A’s retained earnings. Am I right to say that the adjustment to the retained earnings should be of the entity that has made the sale?
Thank you in advance for your reply!
Normally, yes. But if you had read the course notes or even listened to the lectures you would have heard me say, or you would have read, that where an associate company is involved, whether as a buyer or as a seller, the easy way of dealing with a pup is to put the pup against the associate’s retained earnings ALWAYS
Did you not read that in the notes?
Lol… no sir. That’s actually my favourite chocolate ice cream on waffles. I just couldn’t rotate the picture so that it ll look like a normal waffle. 😀
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