A Subsidiary Sold Inventory to Its Parent Entity in Year

Multiple Choice

A subsidiary sold inventory to its parent entity in Year 1 at a profit of $5000. At balance sheet date the parent had not sold the inventory. The company tax rate is 30%. The Year 1 consolidation worksheet will contain the following adjustment entry for inventory:

A) DR Inventory $5 000
B) DR Inventory $ 3 500
C) CR Inventory $5 000
D) CR Inventory $3 500