Teckel Enterprises Owns 100% of Dachsund Limited

Multiple Choice

Teckel Enterprises owns 100% of Dachsund Limited. At the beginning of the fiscal year, there was a profit in Teckel Enterprises inventory of $15,000 on goods acquired from Dachsund Limited in the previous period. The tax rate is 40%. What is the required consolidated financial statement adjustments?

A) Decrease Beginning Retained Earnings: $9,000, decrease Cost of Goods Sold: $15,000, and increase Income Tax Expense: $6,000.
B) Increase Beginning Retained Earnings: $9,000, increase Cost of Goods Sold: $6,000, and decrease Income Tax Expense: $6,000.
C) Decrease Beginning Retained Earnings: $15,000 and decrease Cost of Goods Sold: $15,000.
D) Decrease Beginning Retained Earnings: $9,000 and decrease Cost of Goods Sold: $9,000.