On January 1,20X3,Dwayne Ltd

question 17

Multiple Choice

On January 1,20X3,Dwayne Ltd.formed Carlos Co. ,a 100% owned subsidiary.During 20X6,Dwayne sold Carlos $100,000 in goods.The unrealized profit in Carlos' inventories was $20,000 at December 31,20X5 and $25,000 at December 31,20X6.Ignoring income taxes,what adjustment should be made to the consolidated financial statements for the year ended December 31,20X6 to reflect the unrealized profit in Carlos' ending inventory?

• A)Inventory at December 31,20X6 will be increased by $25,000.
• B)Cost of goods sold for 20X6 will be decreased by $25,000.
• C)Retained earnings at the end of 20X6 will be decreased by $25,000.
• D)Retained earnings at the end of 20X6 will be decreased by $5,000.

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Definitions:

Tire Tread

The part of the tire that comes in contact with the road, designed with patterns that provide traction and disperse water to prevent hydroplaning.

Sidewall

The side portion of a tire that extends from the edge of the tread to the rim of the wheel, marked with information about the tire.

Underinflation

A condition where a tire contains less air pressure than specified by the manufacturer, leading to increased wear and potential tire failure.

Tread

The rubber on the circumference of a tire that makes contact with the road surface, designed with patterns that affect traction and wear performance.