Smith, Inc., owns 70% of Tanya, Inc. During the year just ended, Smith sold goods with a 30% gross profit to Tanya. Tanya sold all of these goods during the year. In its consolidated financial statements for the year, how should the summation of Smith and Tanya income statement items be adjusted? Net income should be reduced by 70% of the gross profit on intra-entity sales. No adjustment is necessary. Sales and cost of goods sold should be reduced by the intra-entity sales. Sales and cost of goods sold should be reduced by 70% of the intra-entity sales