A 90% Owned Subsidiary Sold Merchandise at a Profit to Its

Multiple Choice

A 90% owned subsidiary sold merchandise at a profit to its parent company near the end of 2016. Under the partial equity method, the workpaper entry in 2017 to recognize the intercompany profit in beginning inventory realized during 2017 includes a debit to:

A) Retained Earnings - P.
B) Noncontrolling interest.
C) Cost of Sales.
D) both Retained Earnings - P and Noncontrolling Interest.