3 220,000 -152- Circle the correct answer to each of the following statements and cases: (2) A parent company sells merchandise to its 80% owned subsidiary. What percentage o consolidated financial statements working paper ? 1. f sales and purchases should be eliminated in their 100% of both sales and purchases. A. 80% of both sales and purchases. . 100% of sales and 80% of purchases. C. 80% of sales and 100% of purchases. D. When goods sold by a parent company to its 90% owned subsidiary in 2014 remains in the subsidiary's closing inventory, what is the effect on the balance of the parent company's investment account in its subsidiary as of 12-31-2014 2. No effect. A. A decrease of 100% of the unconfirmed profit. . An increase of 100 % of the unconfirmed profit. C. A decrease of 90% of the unconfirmed profit D. A parent company owns 80% of the outstanding stock of its subsidiary. The gross profit of the parent company and its subsidiary amounts to 60% and 45% of their sales respectively. What percentage of the gross profit in the parent company's ending inventory of the merchandise of its subsidiary should be eliminated on its financial records under the Equity Method? 3. 100% A. 80%. B. 60%. C. 45% D