DNS config

Can anyone halp me?
(Main question at the bottom of message.)

I have a domain “site1”.
I have a hosting plan from DH.
I set DNS records on “site1” to NSx.dreamhost.com.
I add a domain record for “site1” in DH pointing to “/site1/” folder.
I make a sub domain record “sub.site1” in DH pointing to “/sub/” folder.

When I type address “site1” I see “site1” content thal locates in /site1/ folder. Site IP xxx.xxx.178.77
Whan I type address “sub.site1” I see site “sub” content.
All working properly. Site IP xxx.xxx.175.77

My friend have domain “site2” (outside DH) with it own DNS.
Than I want to setup my friend’s sub-domain (“sub.site2”) to point to my “sub.site1”.

Main question what I need to do this?

I guess I need to config friends DNS as follows:
sub A xxx.xxx.175.77
sub CNAME sub.site1

(Whether will it work?)

Do I need in addition to setup virtual domain in my DH panel and setup DNS settings there?

Thank you for paid attention.