What is the amount of unrealised profit that needs to be eliminated at the end of the period,in the following situation,where Barker Limited is the parent of Corbett Limited? (Ignore the tax effect) Barker purchases 500 units of inventory for $20 each.Barker sells this entire inventory to Corbett at a mark up of 50 per cent.At the end of the period,100 units are on hand.
A) $1,000.
B) $2,000.
C) $3,000.
D) $5,000.
E) $10,000.

Question

Quizplus · Accepted Answer

The unrealised profit is calculated on the unsold inventory. Barker sold the inventory to Corbett at a 50% markup, so the selling price per unit is $30 ($20 cost + $10 markup). The unrealised profit per unit is $10. With 100 units unsold, the unrealised profit is 100 units x $10 = $1,000.

What Is the Amount of Unrealised Profit That Needs to Be