PART A
(a) Elimination of the unrealised profit included in the opening and closing inventory
DEBIT CREDIT
Retained earnings – BigCat Ltd R66 667
Cost of sales – BigCat Ltd (R400 000×20%) R66 667
Elimination of unrealised profit in opening inventory
Cost of sales – BigCat Ltd R58 333
Inventory – IWP Ltd (20/120×350 000) R58 333
Elimination of unrealized profits in closing inventories
(a) Elimination of the unrealised profit included in the opening and closing inventory
DEBIT CREDIT
Retained earnings – BigCat Ltd R66 667
Cost of sales – BigCat Ltd (R400 000×20%) R66 667
Elimination of unrealised profit in opening inventory
Cost of sales – BigCat Ltd R58 333
Inventory – IWP Ltd (20/120×350 000) R58 333
Elimination of unrealized profits in closing inventories
