Paige, Inc. owns 80% of Sigler, Inc. During 2011, Paige sold goods with a 40% gross profit to Sigler. Sigler sold all of these goods in 2011. For 2011 consolidated financial statements, how should the summation of Paige and Sigler income statement items be adjusted?
a) Sales and cost of goods sold should be reduced by the intercompany sales.
b) Sales and cost of goods sold should be reduced by 80% of the intercompany sales.
c) Net income should be reduced by 80% of the gross profit on intercompany sales.
d) No adjustment is necessary.