During the current period, a subsidiary entity sold inventories to a parent entity for $40 000. The inventories had previously cost the subsidiary entity $36 000. By reporting date the parent entity had sold 75% of inventories to a party outside the group. The company tax rate is 30%. The adjustment entry in the consolidation worksheet at reporting date is:

a.

Sales revenue	Dr	40 000
Cost of sales	Cr		36 000
Inventories	Cr		4 000
Deferred tax asset	Dr	1 200
Income tax expense	Cr		1 200

b.

Sales revenue	Dr	40 000
Cost of sales	Cr		39 000
Inventories	Cr		1 000
Deferred tax asset	Dr	300
Income tax expense	Cr		300

c.

Sales revenue	Dr	30 000
Cost of sales	Cr		27 000
Inventories	Cr		3 000
Deferred tax asset	Dr	900
Income tax expense	Cr		900

d.

Sales revenue	Dr	10 000
Cost of sales	Cr		9 000
Inventories	Cr		1 000
Deferred tax asset	Dr	300
Income tax expense	Cr		300