Thurston Limited Sold Inventories to Its Parent Entity, Cowboys Ltd

question 24

Multiple Choice

Thurston Limited sold inventories to its parent entity, Cowboys Ltd, at a before-tax profit of $8000. The inventories originally cost Thurston Limited $32 000. At balance sheet date, Cowboys Limited had sold 90% of the inventory to an external party. The consolidation adjustment entry (excluding tax effects) will eliminate unrealised profit amounting to:

• A) $800.
• B) $7200.
• C) $3200.
• D) $24 000.

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