Answer:
c. $500,000
Explanation:
Given that :
Parker Corp. owns 80% of Smith Inc.'s common stock
During Year 1, Parker sold Smith $250,000 of inventory
Therefore; adjusted for inter Corp. sales = $250,000
The following information pertains to Smith and Parker's sales for Year 1:
                          Parker                     Smith
Sales                 $ 1,000,000            $ 700,000
Cost of Sales    $400,000                $ 350,000
Total                   $ 600,000              $ 350,000
For the Unadjusted Cost of Sales of Parker and Smith = $400,000+$ 350,000
= $750,000
The amount that Parker should report as cost of sales in its Year 1 consolidated income statement = Unadjusted Cost of Sales - adjusted for inter Corp. sales 
= $750,000 -  $250,000
= $500,000