Page 457 - F2 Integrated Workbook STUDENT 2019

Answers

Example 11.3

Extracts from Paulie's consolidated statement of financial position at
31 December 20X8
$000

Current assets

Inventory (1,350 + 252) 1,602
Receivables (1,170 + 171 – 54 (W1)) 1,287

Cash (720 + 153 + 9) 882

Current liabilities
Payables (1,620 + 360 – 45) 1,935

(W1) Intra-group balances

The question states that Paulie owes Sal $45,000 (i.e. a payable). This means
that Sal sells to Paulie. Any outstanding receivable and payable balances
between the two companies must be eliminated from the consolidated
accounts.

The question states that there is cash in transit already recorded by Paulie of
$9,000. This needs to be recorded by increasing cash. If the payable is
45,000 after the cash has been paid, the intercompany receivable in Sal’s
books that needs to be eliminated is $45,000 + 9,000 = $54,000.

$000
Dr Payables 45
Dr Cash 9

Cr Receivables 54

449