On January 1,20X8,Blake Company acquired all of Frost Corporation's voting shares for $280,000 cash.On December 31,20X9,Frost owed Blake $5,000 for services provided during the year.When consolidated financial statements are prepared for 20X9,which entry is needed to eliminate intercompany receivables and payables in the consolidation worksheet?
A)Option A
B)Option B
C)Option C
D)Option D

Question

Quizplus · Accepted Answer

In consolidated financial statements, intercompany transactions such as receivables and payables between the parent and subsidiary must be eliminated to avoid double counting. The entry would typically involve debiting intercompany payables and crediting intercompany receivables for the same amount, in this case, $5,000.

On January 1,20X8,Blake Company Acquired All of Frost Corporation's Voting