A Subsidiary Sold Goods to Its Parent Company $\begin{array} { l c } \text { Decrease Sales } & 30,000 \\\text { Decrease Inventory } & 30,000 \\\end{array}$

question 5

Short Answer

A subsidiary sold goods to its parent company. At its year-end, the parent company still had some of the goods in inventory. Included in the value of these inventories is $30,000 of unrealized profits. What consolidation adjustments should be made to eliminate these unrealized profits?
a)
$\begin{array} { l c } \text { Decrease Sales } & 30,000 \\\text { Decrease Inventory } & 30,000 \\\end{array}$

b)
$\begin{array} { l c } \text { Increase Selling expenses } & { 30,000 } \\\text { Decrease Inventory } & 30,000 \\\end{array}$

c)
$\begin{array} { l c } \text { Increase Cost of Sales } & { 30,000 } \\\text { Decrease Inventory } & 30,000 \\\end{array}$

d)
$\begin{array} { l c } \text { Increase Inventory } & 30,000 \\\text { Increase Sales } & 30,000 \end{array}$

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Definitions:

Controllable

Capable of being managed, directed, or regulated by actions or interventions.

Stress

A physical, mental, or emotional response to external or internal stimuli that require adjustment or adaptation.

Secondary Appraisal

The process of evaluating one's ability to cope with or manage the consequences of a stressful event after initially recognizing it as a threat or challenge.

Stressor

Any stimulus that causes stress, invoking a physical, chemical, or emotional response.