A Subsidiary Entity Sold Inventory to Its Parent Entity at a Profit

question 29

Multiple Choice

A subsidiary entity sold inventory to its parent entity at a profit of $4000. The goods had originally cost the subsidiary $10 000. At the end of the year all the inventory was still on hand. The adjustment entry to deal with this transaction on consolidation would include the following line item:

• A) CR Inventory $4 000
• B) CR Inventory $6 000
• C) CR Inventory $10 000
• D) CR Inventory $14 000