abestion Tu 10 points Save Acower p Company purchased a 90% interest in Company
ID: 2394957 • Letter: A
Question
abestion Tu 10 points Save Acower p Company purchased a 90% interest in Company on an ay 2 2013 it accounts for its investment n s company ng the cost the d P Co b Company because s Company was its primary supplier of merchandise for resale. During 2011. P Company bought merchandise from S Company. The selling price to P Company was S300.000, S Company uses a 25% markup on cost. At the end of 2013, P Company still had in its books 2S percent of the inventory purchased from S Company. In 2014, the intercompany sia profit in ending inventory at the end of 2014? OA 544,800 les totalled $280.000 with 20 percent left in inventory at the end of the year. What is the unrealized O B. $10.400 OC.$11.200 O D.$56.000Explanation / Answer
ANSWER IS C($ 11200)
DETAIL WORKING IS GIVEN AS UNDER:
INTER COMPANY SALE S= $ 280000
INVENTORY LEFT AT THE END =$280000X20%=$56000
UNREALISED PROFIT = $56000X25/125 = $11200
_S COMPANY USES A 25% MARKUP ON COST:
AS SUCH IF COSY TO S COMPANY IS $100
THAN BY ADDING 25% ON COST(I.E.,$25) SELLING PRICE OF S COMPANY
TO P COMPANY WILL BE $125
THAN UNREALISED PROFIT WILL BE 25/125
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