On January 1, 20X3, Dwayne Ltd $\begin{array} { l l } { \text { Debit } } &&&&&&& { \text { Credit } } \\\end{array}$

question 3

Short Answer

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's inventories was $20,000 at December 31, 20X5, and $25,000 at December 31, 20X6.
-Ignoring income taxes, what accounts should Dwayne debit and credit by $20,000 in preparing its consolidated financial statements for the year ended December 31, 20X6, to reflect the unrealized profit in Carlos's beginning inventory? $\begin{array} { l l } { \text { Debit } } &&&&&&& { \text { Credit } } \\\end{array}$
A) $\begin{array} { l l } \text {Cost of sales } &&& \text { Inventory } \\\end{array}$
B) $\begin{array} { l l }\text { Inventcry } &&&& \text { Cost of Sales } \\\end{array}$
C) $\begin{array} { l l } \text {Retained earnings } & \text { Cost of sales } \\\end{array}$
D) $\begin{array} { l l } \text {Cost of sales } &&& \text { Tetained earnings }\end{array}$

---

Definitions:

Reactive Depression

A form of depression that is directly triggered by a stressful or traumatic event or situation.

Elderly People

Individuals in society who are considered to be of an older age, often defined as being 65 years or older, who may experience unique health, social, and psychological challenges.

Just As Happy

Suggests a comparison of happiness levels, indicating that different circumstances or choices can result in similar levels of happiness.

Erikson

Refers to Erik Erikson, a developmental psychologist known for his theory on the psychosocial development of humans across eight stages of life.