P Ltd Sells Inventory to Its Subsidiary S Ltd on the Following

Multiple Choice

P Ltd sells inventory to its subsidiary S Ltd on the following basis: cost to P $60 000,sale price to S $80 000.All inventory is held by S at the end of the financial year (assume a tax rate of 30%) .The periodic method is used to account for inventory.Therefore,which of the following consolidation entries are required?

A) $\begin{array} { l l } \text { Dr. Sales } & \$ 80,000 \\\text { Cr. Cost of Sales } & \$ 80,000\end{array}$
B) $\begin{array} { l c } \text { Dr. Sales } & \$ 80,000 \\\text { Cr. Cost of Sales } & \$ 80,000 \\\text { Dr. Closing Inventory } & \$ 20,000 \\\text { Cr. Inventory } & \$ 20,000\end{array}$
C) As for $B$ plus
Dr. Deferred Tax Asset $\$ 6000$
Cr. Income Tax expense $\$ 6000$
D) None of the above