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

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 23E

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