A Subsidiary Sold Inventories to Its Parent Entity in the Year

Multiple Choice

A subsidiary sold inventories to its parent entity in the year ended 30 June 2017 at a profit of $5 000. At balance sheet date the parent had not sold the inventories. The company tax rate is 30%. The consolidation worksheet prepared at 30 June 2017 will contain the following adjustment entry for inventories:

A) Dr Inventories $5 000.
B) Dr Inventories $3 500.
C) Cr Inventories $5 000.
D) Cr Inventories $3 500.