PART A
(a) Elimination of the unrealised profit included in the opening and closing inventory
DEBIT CREDIT
Retained earnings – BigCat Ltd R66 666,67
20 R66 666,67
Cost of sales – BigCat Ltd (120 × 400 000)
Elimination of unrealised profit in opening
inventory
Cost of sales – BigCat Ltd R58 333,33
20 R58 333,33
Inventory – IWP Ltd ( × 350 000)
120
Elimination of unrealized profits in closing
inventories
BRIGHT TUTOR
(a) Elimination of the unrealised profit included in the opening and closing inventory
DEBIT CREDIT
Retained earnings – BigCat Ltd R66 666,67
20 R66 666,67
Cost of sales – BigCat Ltd (120 × 400 000)
Elimination of unrealised profit in opening
inventory
Cost of sales – BigCat Ltd R58 333,33
20 R58 333,33
Inventory – IWP Ltd ( × 350 000)
120
Elimination of unrealized profits in closing
inventories
BRIGHT TUTOR
