Assume Panther Company (Parent) uses the equity method for its pre-consolidation bookkeeping and had an intercompany sale of inventory to a 100% owned subsidiary that gave rise to $87,000 in gross profit. Assume the subsidiary still holds the inventory. What is the equity-method entry Panther would make to defer the gross profit?

Select one:

a. Dr. Equity Investment $87,000; Cr. Equity Income $87,000

b. Dr. Inventory $87,000; Cr. Equity Income $87,000

c. Dr. Cost of Goods Sold $87,000; Cr. Sales $87,000

d. Dr. Equity Income $87,000; Cr. Equity Investment $87,000

e. None of the above.