A Subsidiary Sold Inventories to Its Parent in Year 1

question 27

Multiple Choice

A subsidiary sold inventories to its parent in year 1 at a before-tax profit of $15 000. At balance sheet date, the parent had not sold the inventories to an external party. The company tax rate is 30%. The year 1 consolidation worksheet will contain which of the following adjustment entries for inventories?

• A) Dr Inventories $15 000
• B) Dr Inventories $10 500
• C) Cr Inventories $15 000
• D) Cr Inventories $10 500

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