A Parent Company Sells Merchandise to a Subsidiary Company During

A parent company sells merchandise to a subsidiary company during the year at a price of $300,000, a 20% markup over its cost. The subsidiary company sells all the merchandise to outside customers during the year for $550,000. Which statement is true concerning the required consolidation eliminating entries related to these transactions?

A) Cost of goods sold is reduced by $300,000.
B) Inventory is reduced by $50,000.
C) Retained earnings is reduced by $50,000.
D) Investment in subsidiary is reduced by $250,000.