Prince Corp. owned 80% of Kile Corp.'s common stock. During October 2013, Kile sold merchandise to Prince for $140,000. At December 31, 2013, 50% of this merchandise remained in Prince's inventory. For 2013, gross profit percentages were 30% of sales for Prince and 40% of sales for Kile. The amount of unrealized intra-entity profit in ending inventory at December 31, 2013 that should be eliminated in the consolidation process is
A) $28,000.
B) $56,000.
C) $22,400.
D) $21,000.
E) $42,000.

Question

Quizplus · Accepted Answer

Intra-entity gross profit ($140,000 × .40) $56,000 × Inventory remaining at year's end (50%) = $28,000