In May 2020, a parent sold inventories to a subsidiary entity for $60 000. The inventories had previously cost the parent entity $48 000. The entire inventory is still held by the subsidiary at reporting date, 30 June 2020. Ignoring tax effects, which of the following is the adjustment entry in the consolidation worksheet at reporting date? a. Cash Dr 48 000 Sales revenue Cr 48 000 Cost of sales Dr 48 000 Inventories Cr 48 000 b. Sales revenue Dr 48 000 Cash Cr 48 000 Inventories Dr 48 000 Cost of sales Cr 48 000 c. Cost of sales Dr 60 000 Sales revenue Cr 12 000 Inventories Cr 48 000 d. Sales revenue Dr 60 000 Cost of sales Cr 48 000 Inventories Cr 12 000
In May 2020, a parent sold inventories to a subsidiary entity for $60 000. The inventories had previously cost the parent entity $48 000. The entire inventory is still held by the subsidiary at reporting date, 30 June 2020. Ignoring tax effects, which of the following is the adjustment entry in the consolidation worksheet at reporting date? a. Cash Dr 48 000 Sales revenue Cr 48 000 Cost of sales Dr 48 000 Inventories Cr 48 000 b. Sales revenue Dr 48 000 Cash Cr 48 000 Inventories Dr 48 000 Cost of sales Cr 48 000 c. Cost of sales Dr 60 000 Sales revenue Cr 12 000 Inventories Cr 48 000 d. Sales revenue Dr 60 000 Cost of sales Cr 48 000 Inventories Cr 12 000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
- In May 2020, a parent sold inventories to a subsidiary entity for $60 000. The inventories had previously cost the parent entity $48 000. The entire inventory is still held by the subsidiary at reporting date, 30 June 2020. Ignoring tax effects, which of the following is the
adjustment entry in the consolidation worksheet at reporting date?
|
a. |
Cash |
Dr |
48 000 |
|
|
|
Sales revenue |
Cr |
|
48 000 |
|
|
Cost of sales |
Dr |
48 000 |
|
|
|
Inventories |
Cr |
|
48 000 |
|
|
|
|
|
|
|
b. |
Sales revenue |
Dr |
48 000 |
|
|
|
Cash |
Cr |
|
48 000 |
|
|
Inventories |
Dr |
48 000 |
|
|
|
Cost of sales |
Cr |
|
48 000 |
|
c. |
Cost of sales |
Dr |
60 000 |
|
|
|
Sales revenue |
Cr |
|
12 000 |
|
|
Inventories |
Cr |
|
48 000 |
|
|
|
|
|
|
|
d. |
Sales revenue |
Dr |
60 000 |
|
|
|
Cost of sales |
Cr |
|
48 000 |
|
|
Inventories |
Cr |
|
12 000 |
|
|
|
|
|
|
|
|
|
|
|
|
Answer (write your correct choice):
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