In May 2017, a Parent Sold Inventories to a Subsidiary

question 26

Short Answer

In May 2017, a parent sold inventories to a subsidiary entity for $60 000. The inventories had previously cost the parent entity $48 000. The entire inventory is still held by the subsidiary at reporting date, 30 June 2017. Ignoring tax effects, which of the following is the adjustment entry in the consolidation worksheet at reporting date? $\begin{array}{llll}\text { Cash } & \mathrm{Dr} & 48000 & \\\text { Sales revenue } & \mathrm{Cr} & & 48000 \\\text { Cost of sales } & \mathrm{Dr} & 48000 & \\\text { Inventories } & \mathrm{Cr} & & 48000\end{array}$

$\begin{array}{llll}\text { Sales revenue } & \mathrm{Dr} & 48000 & \\\quad \text { Cash } & \mathrm{Cr} & & 48000 \\\text { Inventories } & \mathrm{Dr} & 48000 & \\\text { Cost of sales } & \mathrm{Cr} & & 48000\end{array}$

$\begin{array}{llll}\text { Cost of sales } & \mathrm{Dr} & 60000 & \\\text { Sales revenue } & \mathrm{Cr} & & 12000 \\\text { Inventories } & \mathrm{Cr} & &48000\end{array}$

$\begin{array}{llll}\text { Sales revenue } & \mathrm{Dr} & 60000 & \\\text { Cost of sales } & \mathrm{Cr} & & 48000 \\\text { Inventories } & \mathrm{Cr} & &12000\end{array}$

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Definitions:

Minority Slowness Effect

A phenomenon where individuals in a numerical minority during decision-making processes take longer to make decisions.

Dissenters

Individuals who express opposition to the majority opinion, which can lead to social change or conflict.

Self-Confident

Having a strong belief in one's own abilities and competence.

Willing To Compromise

The readiness of an individual or party to make concessions to reach a mutual agreement or resolve a conflict.