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  1. business
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  3. a subsidiary charges $840,000 for services provide

A subsidiary charges $840,000 for services provided to a parent and reports this amount as...

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Accounting

A subsidiary charges $840,000 for services provided to a parent and reports this amount as service revenue. The price reflects a
markup of 20% over cost. Both companies report service expenses as part of operating expenses.
What eliminating entry is necessary with respect to this intercompany transaction?
Debit investment in subsidiary, credit operating expenses for $672,000
Debit service revenue, credit operating expenses for $840,000
Debit service revenue, credit operating expenses for $700,000
Debit beginning retained earnings, credit operating expenses for $140,000
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