Company P acquired 90 percent of the common stock of Company S on 1/1/2020. During 2020, Company S reported a net income of $50,000 and dividends of $12,000. Company P uses the simple equity method to account for the investment in S. Which of the following entries is prepared by Company P when consolidating the financial statements for 2020?

CHOOSE THE RIGHT ONE:

a.Debit Subsidiary Income $10,800, Credit Dividends Declared $10,800

b. Debit Dividends Receivable $10,800, Credit Subsidiary Income $10,800