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.

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Definitions:

Direction

A term that specifies orientation or course of motion; in technical contexts, it often relates to the flow of data, operations, or movements in systems and machinery.

Ladder Logic

A graphical programming language used in programmable logic controllers (PLCs) that represents electrical control circuits with rungs of logic operations.

Rungs

The horizontal lines found in ladder logic diagrams representing electrical circuits, where each rung signifies a unique control element or condition.

Input

In computing and electronics, an input is the signal or data received by a system or component.