If P acquired 90% of the outstanding common stock of S company. During 2015, P Company sells merchandise amounted 1800000 to S Company at 20% above cost. S Company had in its inventory half of the amount of goods purchased from P during 2015. If P company uses cost method, what eliminating entry will be recorded by P in 2016 to eliminate the Unrealized Profit in Inventory related to 2015? Select one: a. DR. Cost of goods sold 150000 CR. Inventory (ending) 150000 b. DR. Retained earnings 1/1 900000 CR. Inventory (ending) 900000 c. DR. Retained earnings 1/1 135000, NCI 15000 CR. Cost of goods sold 150000 d. DR. Retained earnings 1/1 150000 CR. Cost of goods sold 150000 e. DR. Retained earnings 1/1 810000, NCI 90000 CR. Cost of goods sold 900000
If P acquired 90% of the outstanding common stock of S company. During 2015, P Company sells merchandise amounted 1800000 to S Company at 20% above cost. S Company had in its inventory half of the amount of goods purchased from P during 2015. If P company uses cost method, what eliminating entry will be recorded by P in 2016 to eliminate the Unrealized Profit in Inventory related to 2015? Select one: a. DR. Cost of goods sold 150000 CR. Inventory (ending) 150000 b. DR. Retained earnings 1/1 900000 CR. Inventory (ending) 900000 c. DR. Retained earnings 1/1 135000, NCI 15000 CR. Cost of goods sold 150000 d. DR. Retained earnings 1/1 150000 CR. Cost of goods sold 150000 e. DR. Retained earnings 1/1 810000, NCI 90000 CR. Cost of goods sold 900000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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If P acquired 90% of the outstanding common stock of S company. During 2015, P Company sells merchandise amounted 1800000 to S Company at 20% above cost. S Company had in its inventory half of the amount of goods purchased from P during 2015. If P company uses cost method, what eliminating entry will be recorded by P in 2016 to eliminate the Unrealized Profit in Inventory related to 2015?
Select one:
a. DR. Cost of goods sold 150000 CR. Inventory (ending) 150000
b. DR. Retained earnings 1/1 900000 CR. Inventory (ending) 900000
c. DR. Retained earnings 1/1 135000, NCI 15000 CR. Cost of goods sold 150000
d. DR. Retained earnings 1/1 150000 CR. Cost of goods sold 150000
e. DR. Retained earnings 1/1 810000, NCI 90000 CR. Cost of goods sold 900000
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