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:

Environmental Conditions

Refers to the various physical and biological factors that affect the life and development of organisms.

Stimulus Control

A behavior modification technique that involves changing the environment to reduce undesired behaviors by associating them with different cues.

Time Sampling

A research method in which observations are made at specific intervals over a defined period to gather data.

Self-monitors

Individuals who regulate their behavior to accommodate social situations.