A Subsidiary Sold Goods to Its Parent Company $$\begin{array} { | l | c | } \hline \text { DR Sales } & 15,000 \\\hline \text { CR Inventory } & 15,000 \\\hline\end{array}$$

question 28

Multiple Choice

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 $15,000 of unrealized profits. What journal entry should be made to eliminate these unrealized profits?

• A) \[\begin{array} { | l | c | }
• \hline \text { DR Sales } & 15,000 \\
• \hline \text { CR Inventory } & 15,000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | c | }
• \hline \text { DR Cost of sales } & 15,000 \\
• \hline \text { CR Inventory } & 15,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | c | }
• \hline \text { DR Selling expenses } & 15,000 \\
• \hline \text { CR Inventory } & 15,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | c | c | }
• \hline \text { DR Inventory } & 15,000 \\
• \hline \text { CR Sales } & 15,000 \\
• \hline
• \end{array}\]

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Definitions:

Calculated

Done with full awareness or intentionality, often involving mathematical or strategic planning.

Microsystems

The immediate environments (such as family, school, and peer group) in which individuals interact directly and which influence their development.

Mesosystems

In ecological systems theory, the interaction between two or more settings that the developing person actively participates in, such as the connection between family experiences and school life.

Exosystems

A layer in Bronfenbrenner's ecological systems theory referring to settings that indirectly influence an individual, such as parents' workplaces.