During the Year Ended 30 June 2017, a Subsidiary Sold

Multiple Choice

During the year ended 30 June 2017, a subsidiary sold inventories to its parent at a before-tax profit of $20 000. The inventories originally cost the subsidiary $87 000. At 30 June 2017 all the inventory was still on hand and it was sold to an external party in July 2017. Ignoring tax effects, the consolidation adjustment entry to eliminate this transaction during the year ended 30 June 2018 would include which of the following line items?

A) Dr Cost of sales $20 000
B) Cr Cost of sales $20 000
C) Dr Cost of sales $87 000
D) Cr Cost of sales $87 000