In May 20X7, a Parent Entity Sold Inventory to a Subsidiary

question 30

Multiple Choice

In May 20X7, a parent entity sold inventory to a subsidiary entity for $30 000. The inventory had previously cost the parent entity $24 000. The entire inventory is still held by the subsidiary at reporting date, 30 June 20X7. Ignoring tax effects, the adjustment entry in the consolidation worksheet at reporting date is:

• A)\(\begin{array} { l l l l }
• \text { Cash } & \mathrm { Dr } & 24,000 & \\
• \quad \text { Sales revenue } & \mathrm { Cr } & & 24,000 \\
• \text { Cost of sales } & \mathrm { Dr } & 24,000 & \\
• \quad \text { Inventory } & \mathrm { Cr } & & 24,000
• \end{array}\)
• B)\(\begin{array} { l l l l }
• \text { Sales revenue } & \mathrm { Dr } & 24,000 & \\
• \quad \text { Cash } & \mathrm { Cr } & & 24,000 \\
• \text { Inventory } & \mathrm { Dr } & 24,000 & \\
• \quad \text { Cost of sales } & \mathrm { Cr } & & 24,000
• \end{array}\)
• C)
• \(\begin{array}{llr}\text { Sales revenue }& \mathrm{Dr}&30,000\\
• \text { Cost of sales } & \mathrm{Cr} & 6,000 \\
• \text { Inventory } & \mathrm{Cr} & 24,000
• \end{array}\)
• D) \(\begin{array}{llr}\text { Sales revenue } & \mathrm{Dr} & 30,000\\
• \text { Cost of sales } & \mathrm{Cr} & 24,000 \\
• \text { Inventory } & \mathrm{Cr} & 6,000
• \end{array}\)

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Definitions:

Marginal Mean

The mean of a row or column within a two-way or multi-way table, reflecting the average across one of the variables involved.

Marginal Mean

The mean of a subset of grouped data, considering one or more factors in a multi-factorial design.

Main Effect

The immediate impact that an independent variable has on a dependent variable within an experimental setting.

Interaction Effect

An occurrence in statistical analysis where the effect of one independent variable on a dependent variable changes depending on the level of another independent variable.