P Ltd Sells Inventory to Its Subsidiary S Ltd on the Following

question 22

Multiple Choice

P Ltd sells inventory to its subsidiary S Ltd on the following basis: cost to P $60 000,sale price to S $80 000.All inventory is held by S at the end of the financial year (assume a tax rate of 30%) .The periodic method is used to account for inventory.Therefore,which of the following consolidation entries are required?

• A)\(\begin{array} { l l }
• \text { Dr. Sales } & \$ 80,000 \\
• \text { Cr. Cost of Sales } & \$ 80,000
• \end{array}\)
• B)\(\begin{array} { l c }
• \text { Dr. Sales } & \$ 80,000 \\
• \text { Cr. Cost of Sales } & \$ 80,000 \\
• \text { Dr. Closing Inventory } & \$ 20,000 \\
• \text { Cr. Inventory } & \$ 20,000
• \end{array}\)
• C)As for \(B\) plus
• Dr. Deferred Tax Asset \(\$ 6000\)
• Cr. Income Tax expense \(\$ 6000\)
• D) None of the above

---

Definitions:

Urinary Incontinence

Inability to control urination.

Fecal Incontinence

Inability to control passage of feces and gas from the anus.

Hearing Aid

An apparatus created to enhance listening by amplifying sound for an individual experiencing hearing impairment.

Adjust The Volume

To modify the loudness or intensity of an audio output from a device or system to a desired level.