The options for the accounts are Accounts Receivable, Inventory, Investment in subsidiary, Accounts Payable, Sales, Cost of Goods Sold.

Computing the amount of equity income and preparing CII consolidation journal entries Equity method Assume that a parent company sells inventory to its wholly owned subsidiary. The subsidiary, ultimately, sells the inventory to customers outside of the consolidated group. You have compiled the following data for the years ending 2015 and 2016: Gross Profit Subsidiary Net Inventory on Unsold Receivable Income Sales Inventories (Payable) 2016 $150,000 $20,000 $7,000 $7,500 2015 $100,000 $25,000 $9,000 $14,000 Assume that inventory not remaining at the end of the year was sold outside of the consolidated group. The subsidiary paid $80,000 in dividends during 2016. a. How much Income (loss) from subsidiary should the parent report in its pre-consolidation income statement the year ending 2016 assuming that it uses the equity method of accounting for its Equity Investment