Strickland Company sells inventory to its parent, Carter Company, at a profit during 2012. One-third of the inventory is sold by Carter in 2012. In the consolidation worksheet for 2012, which of the following choices would be a debit entry to eliminate the intra-entity transfer of inventory? A. Retained earnings. B. Cost of goods sold. C. Inventory. D. Investment in Strickland Company. E. Sales.

Question

Business

Jazz

8 April, 14:14

Strickland Company sells inventory to its parent, Carter Company, at a profit during 2012. One-third of the inventory is sold by Carter in 2012. In the consolidation worksheet for 2012, which of the following choices would be a debit entry to eliminate the intra-entity transfer of inventory? A. Retained earnings. B. Cost of goods sold. C. Inventory. D. Investment in Strickland Company. E. Sales.

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Howard Holden · Answer 1

Answer: Cost of goods sold would be a debit entry to eliminate the intra-entity transfer of inventory.

Cost of goods sold is known as the direct costs ascribable to the production of the commodity sold in a organization. This considers the cost of the materials that has been substantially used in making the commodity including the labor costs.

Therefore, the correct option is (b)