The next three questions are based on the following information. Strata Co. is a retailer whose shares are publicly traded. During year X1, Strata reported the following quarterly information in its SEC filings. Quarter Pretax income Taxes(20%) NI Q1 02 Q3 04 100k 130k 140k 180k (20k) (26k) (28k) (36k) 80k 104k 112k 144k As a retailer, Strata counts it inventory on 6/30 and 12/31 of each year. While observing Strata's inventory count on 12/31/x1 prior to closing, the auditor discovered that Strata's ending inventory count was over stated by 30,000 as it included good received from Rapid Co. that were being held on consignment. The auditor went back to the inventory scan records that were made when Strata counted its inventory back on 6/30/x1 and discovered that the same 30,000 good being held on consignment had been counted when calculating Strata's ending inventory. As a corporation, Strata files quarterly tax returns with the IRS. In response to this information, what accounting entries, if any, should Strata make on 12/21/x1?| a. Debit cost of sales for 30,000 and credit inventory for 30,000 b. Debit cost of sales for 30,000, debit tax expense for 6,000 and credit inventory for 30,000 and credit taxes payable for 6,000 C. Debit RE for 30,000 and credit inventory for 30,000 d. Debit cost of sales for 30,000, debit AR for 6,000, credit in for 30,000 and credit tax exp for 6,000 e. None of the above 8. After making correcting accounting entries in the previous question, what additional responsibilities does P have under ASC 250 regarding its investment in Strata? a. P is required to restate consolidated results for 22 b. P is required to restate consolidated results for 93 P is required to disclose the effects of the Strata error on previously reported results d. All of the above e. None of the above C. On 1/2/X1 Southern company purchased equipment for 100,000 and has recorded SL depreciation each year based on a 10 year life. At the end of 4 years, on 12/31/X4, it has become apparent to Southern that the asset will only have a remaining useful life of 2 years. Based on this information, Southern is required to do which of the following? a. On 12/31/X4 Southern should debit a loss for 26,667 and credit accum. Depr. For 26,667 b. On 12/31/x4 Southern should retrospectively recalculate depreciation back to 1/1/x1 baed on a 6-year life and adjust RE and Accumulated Depreciation accordingly c. Southern should make no entries on 12/31/X4, but must record 30,000 of Depr. Exp. In years x5 and x6 d. Southern must present a footnote to its 12/31/x4 financial statements describing the change in estimate and provide justification e. None of the above