The Journal Entries to Eliminate Unrealised Profit in Closing Inventory

question 43

Multiple Choice

The journal entries to eliminate unrealised profit in closing inventory at 30 June 2014 were as follows: $$\begin{array} { | l | r | r | } \hline 30 \text { June } 2014 & & \\\hline \text { Dr Cost of goods sold } & 50000 & \\\hline \text { Cr lnventory } & & 50000 \\\hline & & \\\hline \text { Dr Deferred tax asset } & 15000 & \\\hline \text { Cr Income tax expense } & & 15000 \\\hline\end{array}$$ What are the journal entries to eliminate the unrealised profits in opening inventory the following period?

• A) \(\begin{array}{|l|r|l|}
• \hline 1 \text { July } 2014 & & \\
• \hline \text { Dr Cost of goods sold } & 50000 & \\
• \hline \text { Cr Inventory } & & 50000 \\
• \hline & & \\
• \hline \text { Dr Deferred tax asset } & 15000 & \\
• \hline \text { Cr Income tax expense } & & 15000 \\
• \hline
• \end{array}\)
• B) \(\begin{array}{|l|r|l|}
• \hline 1 \text { July } 2014 & & \\
• \hline \text { Dr Opening retained earnings (1 July 2014) } & 50000 & \\
• \hline \text { Cr Cost of goods sold } & & 50000 \\
• \hline & & \\
• \hline \text { Dr Deferred tax asset } & 15000 & \\
• \hline \text { Cr Opening retained earnings (1 July 2014) } & & 15000 \\
• \hline
• \end{array}\)
• C) \[\begin{array} { | l | r | r | }
• \hline \text { 1 July } 2014 & & \\
• \hline \text { Dr Opening retained earnings (1 July 2014) } & 50000 & \\
• \hline \text { Cr lnventory } & & 50000 \\
• \hline & & \\
• \hline \text { Dr Deferred tax asset } & 15000 & \\
• \hline \text { Dr Opening retained earnings (1 July 2014) } & & 15000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | r | r | }
• \hline \text { 1 July } 2014 & & \\
• \hline \text { Dr Opening retained earnings (1 July 2014) } & 50000 & \\
• \hline \text { Cr Cost of goods sold } & & 50000 \\\hline \\
• \hline \text { Dr Income tax expense } & 15000 \\
• \hline \text { Cr Opening retained earnings (1 July 2014) } && 15000 \\
• \hline
• \end{array}\]

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Definitions:

Straightforward Manipulations

Simple and direct manipulations of the independent variable in an experiment, designed to understand its effect on the dependent variable.

Confederate

An individual who is secretly working with the researchers in an experiment, pretending to be a participant but is actually part of the experiment setup.

Staged Manipulation

A technique in experimental research where situations or events are deliberately created by the researcher to elicit a behavior.

Self-Report

A method where individuals provide information about themselves, typically through questionnaires or interviews.