Question
12. During the current period, a subsidiary entity sold inventories to its parent entity at a profit of $4 000. The goods had originally cost
12. During the current period, a subsidiary entity sold inventories to its parent entity at a profit of $4 000. The goods had originally cost the subsidiary $10 000. At the end of the year all the inventories were still on hand. The adjustment entry to deal with this transaction on consolidation would include the following line item:
a) Dr Retained earnings (subsidiary) and Cr Inventories (Parent) $4 000.
b) Cr Inventories (Parent) $6 000 and Dr Retained earnings (subsidiary).
c) Dr Retained earnings (subsidiary) and Cr Inventories (Parent) $10 000.
d) Dr Retained earnings (subsidiary) and Cr Inventories (Parent) $14 000.
12. During the current period, a subsidiary entity sold inventories to its parent entity at a profit of $4 000. The goods had originally cost the subsidiary $10 000. At the end of the year all the inventories were still on hand. The adjustment entry to deal with this transaction on consolidation would include the following line item:
a) Dr Retained earnings (subsidiary) and Cr Inventories (Parent) $4 000.
b) Cr Inventories (Parent) $6 000 and Dr Retained earnings (subsidiary).
c) Dr Retained earnings (subsidiary) and Cr Inventories (Parent) $10 000.
d) Dr Retained earnings (subsidiary) and Cr Inventories (Parent) $14 000.
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Financial Accounting
Authors: John Hoggett, John Medlin, Keryn Chalmers, Claire Beattie, Andreas Hellmann, Jodie Maxfield
10th Edition
073036321X, 978-0730363217
