Thurston Limited Sold Inventories to Its Parent Entity, Cowboys Ltd

Multiple Choice

Thurston Limited sold inventories to its parent entity, Cowboys Ltd, at a before-tax profit of $8000. The inventories originally cost Thurston Limited $32 000. At balance sheet date, Cowboys Limited had sold 90% of the inventory to an external party. The consolidation adjustment entry (excluding tax effects) will eliminate unrealised profit amounting to:

A) $800.
B) $7200.
C) $3200.
D) $24 000.