In the consolidation worksheet for 2017, which of the following accounts would be credited to defer unrecognized intra-entity gross profit with regard to the 2017 intra-entity transfers?
A) Retained earnings.
B) Cost of goods sold.
C) Inventory.
D) Investment in Strickland Company.
E) Sales.

Question

Quizplus · Accepted Answer

Inventory is credited to defer unrecognized intra-entity gross profit with regard to the 2017 intra-entity transfers. This is because the gross profit has been realized in the current year, but it is not being recognized until the inventory is sold to an outside party. Therefore, the intra-entity gross profit needs to be deferred by reducing inventory.

In the Consolidation Worksheet for 2017, Which of the Following