Parent owns 80% of Sunny, Inc. During the current year, Parent sold goods to Sunny at a 40% gross profit. Sunny sold ALL of these goods by year-end. In preparing consolidated income statements, Parents revenues and expenses are added to Sunnys revenues and expenses. What must be eliminated?

a. sales and cost of goods sold must be eliminated by the amount of inter-company sales

b. sales and cost of goods sold must be eliminated by 80% of the amount of inter-company sales

c. net income must be reduced by 80% of the gross profit on the inter-company sales

d. no adjustment is needed since all of the product was sold to a final unrelated party

. Which of the following accounts has a debit balance on the final consolidated columns of the worksheet?

a. earnings from subsidiary b. investment in subsidiary

c. earnings of non-controlling interest d. non-controlling interest share of owners equity