3) On January 1, 20X3, Dwayne Ltd. formed Carlos Co., a 100% owned subsidiary. During 20X6, Dwayne sold Carlos $100,000 in goods. The unrealized profit in Carlos's inventories was $20,000 at December 31, 20X5, and $25,000 at December 31, 20X6. Ignoring income taxes, what accounts should Dwayne debit and credit by $25,000 in preparing its consolidated financial statements for the year ended December 31, 20X6, to reflect the unrealized profit in Carlos's ending inventory?

Question 16 options:

	Debit Credit A) Cost of sales Inventory
	Debit Credit B) Inventory Cost of Sales
	Debit Credit C) Retained earnings Cost of sales
	Debit Credit D) Cost of sales Retained earnings