Stark Company, a 90% Owned Subsidiary of Parker, Inc

question 89

Multiple Choice

Stark Company, a 90% owned subsidiary of Parker, Inc. sold land to Parker on May 1, 2012, for $80,000. The land originally cost Stark $85,000. Stark reported net income of $200,000, $180,000, and $220,000 for 2012, 2013, and 2014, respectively. Parker sold the land purchased from Stark in 2012 for $92,000 in 2014.
Which of the following will be included in a consolidation entry for 2013?

• A) Debit retained earnings for $5,000.
• B) Credit retained earnings for $5,000.
• C) Debit investment in subsidiary for $5,000.
• D) Credit investment in subsidiary for $5,000.
• E) Credit land for $5,000.

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Definitions:

QBO

Acronym for QuickBooks Online, a cloud-based financial management software.

Money Out

A term referring to payments or expenditures made by a business, leading to an outflow of funds.

Pay Bills

The act of settling outstanding accounts payable or obligations, usually referring to the remittance of money to creditors.

Bank Deposit Form

A document used to deposit funds into a bank account, specifying details like the account number and deposit amount.