On 5 June 2022, a Parent Entity Sold Inventories to a Subsidiary

question 22

Multiple Choice

On 5 June 2022, a parent entity sold inventories to a subsidiary entity for $80 000. The inventories had previously cost the parent entity $72 000. All the inventories are still held by the subsidiary at reporting date, 30 June 2022. Ignoring tax effects, the adjustment entry in the consolidation worksheet at reporting date is:

• A) \[\begin{array} { l l l l }
• \text { Cash } & \mathrm { Dr } & 72,000 & \\
• \quad \text { Sales reverue } & \mathrm { Cr } & & 72,000 \\
• \text { Cost of sales } & \mathrm { Dr } & 72,000 & \\
• \text { Irventories } & \mathrm { Cr } & & 72,000
• \end{array}\]
• B) \[\begin{array} { l l l l }
• \text { Sales reverule } & \mathrm { Dr } & 72000 \\
• \text { Cash } & \mathrm { Cr } & & 72000\\
• \text { Irvertories } & \mathrm { Dr } & 72000 & \\
• \text { Cost of sales } & \mathrm { Cr } & &72000
• \end{array}\]
• C) \(\begin{array}{ccr}
• \text { Sales revenue } & \mathrm{Dr} \quad 80,000 & \\
• \text { Cost of sales } & \mathrm{Cr} & 8,000 \\
• \text { Inventories } & \mathrm{Cr} & 72,000
• \end{array}\)
• Inventories
• D) \(\begin{array}{ccc}
• \text { Sales revenue } & \mathrm{Dr} \quad 80,000 & \\
• \text { Cost of sales } & \mathrm{Cr} & 72,000 \\
• \text { Inventories } & \mathrm{Cr} & 8000
• \end{array}\)

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Definitions:

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Scholars or researchers who study how psychological and emotional factors affect the economic decisions of individuals or institutions.

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Economists who believe in the effectiveness of policies that focus on boosting output and economic growth by increasing the supply of goods and services, often through tax cuts and deregulation.

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Economists from the 18th and 19th centuries who focused on the idea that free markets regulate themselves through the laws of supply and demand.

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