The elimination entry for unrealized profit is a debit to purchases and a credit to ending inventory.

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The elimination entry for unrealized profit typically involves a debit to the inventory account (to reduce the value of inventory by the amount of unrealized profit) and a credit to the cost of goods sold (COGS) or to an intercompany profit account, not a debit to purchases and a credit to ending inventory.

The Elimination Entry for Unrealized Profit Is a Debit to Purchases