Question - Harris Enterprises owns 100% of the outstanding stock of Staton Company. The following transactions occurred during 2X13:
a) Harris Enterprises sold inventory costing $2,750 on account to Staton Company for $3,800. As of year-end, the amount due had not been paid. Harris Enterprises and Staton Company use a perpetual inventory system.
b) Staton Company borrowed $8,000 from Harris Enterprises on December 31, 2X13, and signed a 2-year note.
Required: For each item, prepare the necessary intercompany elimination entry that is needed, if at all, in order to prepare a year-end consolidated balance sheet. Be certain to specifically identify whether an account is on the books of Harris Enterprises or Staton Company.