A Subsidiary Sold Inventory to Its Parent in Year 1

question 4

Multiple Choice

A subsidiary sold inventory to its parent in year 1 at a before-tax profit of $15 000.At balance sheet date,the parent had not sold the inventory to an external party.The company tax rate is 30%.The year 1 consolidation worksheet will contain which of the following adjustment entries for inventory?

• A)Dr Inventory $15 000
• B)Dr Inventory $10 500
• C)Cr Inventory $15 000
• D)Cr Inventory $10 500

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