Let Company owns 80% of Tam Corp.’s common stock. During October 2019 Tam sold merchandise to Let for 125,000. At December 31, 2019, one-half of the merchandise remained in Let inventory. For 2019, gross profit percentages were 30% for Let and 40% for Tam. The amount of unrealized intercompany profit in ending inventory at December 31, 2019 that should be eliminated in consolidation is: a.) 50,000 b.) 20,000 c.) 18,750 d.) 25,000
Let Company owns 80% of Tam Corp.’s common stock. During October 2019 Tam sold merchandise to Let for 125,000. At December 31, 2019, one-half of the merchandise remained in Let inventory. For 2019, gross profit percentages were 30% for Let and 40% for Tam. The amount of unrealized intercompany profit in ending inventory at December 31, 2019 that should be eliminated in consolidation is: a.) 50,000 b.) 20,000 c.) 18,750 d.) 25,000
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 2P
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Let Company owns 80% of Tam Corp.’s common stock. During October 2019 Tam sold merchandise to Let for 125,000. At December 31, 2019, one-half of the merchandise remained in Let inventory. For 2019, gross profit percentages were 30% for Let and 40% for Tam. The amount of unrealized intercompany profit in ending inventory at December 31, 2019 that should be eliminated in consolidation is:
a.) 50,000
b.) 20,000
c.) 18,750
d.) 25,000
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