Senior Inc
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Senior Inc. owns 85 percent of Junior Inc. During 20X8, Senior sold goods with a 25 percent gross profit to Junior. Junior sold all of these goods in 20X8. How should 20X8 consolidated income statement items be adjusted?
- No adjustment is necessary.
- Sales and cost of goods sold should be reduced by 85 percent of the intercompany sales.
- Net income should be reduced by 85 percent of the gross profit on intercompany sales.
- Sales and cost of goods sold should be reduced by the intercompany sales.
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Answer:
D .
Explanation
Income statement will include sale and cost of goods, except inter company sales.
