Strickland Company sells inventory to its parent, Carter Company, at a profit during 2010. One-third of the inventory is sold by Carter in 2010.
-In the consolidation worksheet for 2010, which of the following choices would be a credit entry to eliminate unrealized intra-entity gross profit with regard to the 2010 intra-entity sales?
A) Retained earnings.
B) Cost of goods sold.
C) Inventory.
D) Investment in Strickland Company.
E) Sales.

Question

Quizplus · Accepted Answer

The unrealized intra-entity gross profit is included in the ending inventory. To eliminate this profit, a credit entry is made to the Inventory account in the consolidation worksheet.

Strickland Company Sells Inventory to Its Parent, Carter Company, at a Profit