During the Fiscal Year Ended October 31, 2006, a Wholly

Multiple Choice

During the fiscal year ended October 31, 2006, a wholly owned subsidiary of Prescott Company had an adjusted net income of $200,000 and declared dividends of $80,000. In its own operations (exclusive of its equity-method journal entries for the subsidiary) , Prescott had total revenue of $800,000 and total costs and expenses of $600,000. In an October 31, 2006, closing entry, Prescott should:

A) Credit Intercompany Investment Income $200,000
B) Credit Retained Earnings of Subsidiary $120,000
C) Credit Retained Earnings $400,000
D) Debit Costs and Expenses $800,000