Question 1 (20 marks) For each of the following scenarios, prepare dated journal entries on

Retained earnings, December 31, 20X8

$2,784,000

$1,640,000

Additional information for 20X8:

·        During 20X8, Victory purchase $1,280,000 in goods from Sauce. At the end of the year, half of these goods were still in Victory's inventory.

·        During December 20X8, Sauce purchased $320,000 in goods from Victory. At the end of the year, all of these goods were still in Sauce's inventory.

·        Both Victory and Sauce's gross margins for these goods were unchanged from previous years.

·        At the end of 20X8, Sauce did not pay the interest due on the loan from Victory, however, both companies had accrued the interest.

Required:

a)   Prepare a consolidated statement of financial position at the acquisition date.

b)   Prepare a set of consolidated financial statements for 20X7.

c)   Calculate Victory's consolidated retained earnings for 20X8. Do not prepare financial statements.