Franklin Ltd $$\begin{array} { | c | c | } \hline \text { DR Cost of sales } & 90,000 \\\hline \text { CR Inventory } & 90,000 \\\hline\end{array}$$

question 13

Multiple Choice

Franklin Ltd., a subsidiary of Frayer Ltd., sold $500,000 of goods to its parent company in 20X1. At the end of 20X1, some of the goods were not sold and there was $90,000 of unrealized profit associated with these goods. The goods were sold in 20X2. At the end of 20X2, which of the following consolidating entries should be made with respect to the unrealized profits?

• A) \[\begin{array} { | c | c | }
• \hline \text { DR Cost of sales } & 90,000 \\
• \hline \text { CR Inventory } & 90,000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | c | }
• \hline \text { DR Cost of sales } & 90,000 \\
• \hline \text { CR Retained earnings } & 90,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | c | }
• \hline \text { DR Retained earnings } & 90,000 \\
• \hline \text { CR Cost of sales } & 90,000 \\
• \hline
• \end{array}\]
• D)An entry is not required as the goods have been sold to external parties.

---

Definitions:

Cutthroat Oligopolist

A firm in an oligopoly market structure that aggressively competes on price, often to the detriment of profit margins.

Prices

The amount of money required to purchase goods or services, determined by factors like supply and demand, production costs, and competition.

Cutthroat Competitor

Refers to businesses or individuals that aggressively compete in the market, often by slashing prices or adopting ruthless strategies to undermine rivals.

Competitive Spectrum

Refers to the range of competition levels within an industry, from perfect competition to complete monopoly.