Wathan Inc. sold $180,000 in inventory to Miller Co. during 2020, for $270,000. Miller resold $108,000 of this merchandise in 2020 with the remainder to be disposed of during 2021.Required:Assuming Wathan owns 25% of Miller and applies the equity method, prepare the journal entry Wathan should have recorded at the end of 2020 to defer gross profit on intra-entity inventory sales.

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The Answer of Wathan Inc. sold $180,000 in inventory to Miller Co. during 2020, for $270,000. Miller resold $108,000 of this merchandise in 2020 with the remainder to be disposed of during 2021.Required:Assuming Wathan owns 25% of Miller and applies the equity method, prepare the journal entry Wathan should have recorded at the end of 2020 to defer gross profit on intra-entity inventory sales.