During the Year Ended 30 June 2022, a Subsidiary Entity

During the year ended 30 June 2022, a subsidiary entity sold inventories to a parent entity for $50 000. The inventories had previously cost the subsidiary entity $45 000. By 30 June 2022 the parent entity had sold 75% of the inventories to a party outside the group. The company tax rate is 30%. The adjustment entry in the consolidation worksheet at 30 June 2023 is:

A) $$\begin{array} { l l c r } \text { Sales reverue } & \mathrm { Dr } & 50000 \\\text { Cost of sales } & \mathrm { Cr } & & 48750 \\\text { Irventories } & \mathrm { Cr } & & 1250 \\\text { Deferred tax asset } & \mathrm { Dr } & 375 & \\\text { Income tax expense } & \mathrm { Cr } & & 375\end{array}$$
B) $$\begin{array} { l l l } \text { Retained earnings } & \mathrm { Dr } & 3500 \\\text { Income tax expense } & \mathrm { Dr } & 1500 \\\text { Cost of sales } & \mathrm { Cr } &5000\end{array}$$
C) $$\begin{array} { l l l } \text { Retained earrings } & \mathrm { Dr } & 875 \\\text { Incorne tax expense } & \mathrm { Dr } & 375 \\\text { Cost of sales } & \mathrm { Cr } &1250\end{array}$$
D) $$\begin{array} { c l c c } \text { Retained earnings } & \mathrm { Dr } & 1250 \\\text { Irventories } & \mathrm { Cr } & 1250 \\\text { Deferred tax asset } & \mathrm { Dr } & 375 \\\text { Retained earnings } & \mathrm { Cr } & 375\end{array}$$

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