A Subsidiary Sold Inventories to Its Parent Entity in the Year

question 30

Multiple Choice

A subsidiary sold inventories to its parent entity in the year ended 30 June 2017 at a profit of $5 000. At balance sheet date the parent had not sold the inventories. The company tax rate is 30%. The consolidation worksheet prepared at 30 June 2017 will contain the following adjustment entry for inventories:

• A) Dr Inventories $5 000.
• B) Dr Inventories $3 500.
• C) Cr Inventories $5 000.
• D) Cr Inventories $3 500.

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Definitions:

Payroll Register

A record that summarizes wages, deductions, and net pay for all employees for each pay period.

Payroll Taxes

Payroll taxes are taxes imposed on employers or employees, and are usually calculated as a percentage of the salaries that employers pay their staff.

Liabilities

Financial obligations or debts that a business needs to settle in the future as a result of past transactions or events.

Accounting Period

A specific period of time used for financial reporting purposes, typically a fiscal year or quarter.