Exercise 22.1 ★ CONSOLIDATION ADJUSTMENTS Jessica Ltd sold inventory during the current period to its wholly owned subsidiary, Amelie Ltd, for $15 000. These items previously cost Jessica Ltd $12 000. Amelie Ltd subsequently sold half the items to Ningbo Ltd for $8000. The tax rate is 30%. The group accountant for Jessica Ltd, Li Chen, maintains that the appropriate consolidation adjustment entries are as follows: Sales Cost of Sales Inventory Deferred Tax Asset Income Tax Expense Dr Cr Cr Dr Cr 15 000 300 13 000 2 000 300 Required 1. Discuss whether the entries suggested by Li Chen are correct, explaining on a line-by-line basis the correct adjustment entries. 2. Determine the consolidation worksheet entries in the following year, assuming the inventory is onsold, and explain the adjustments on a line-by-line basis.