abestion Tu 10 points Save Acower p Company purchased a 90% interest in Company on an ay 2 2013 it accounts for its investment n s company ng the cost the d P Co b Company because s Company was its primary supplier of merchandise for resale. During 2011. P Company bought merchandise from S Company. The selling price to P Company was S300.000, S Company uses a 25% markup on cost. At the end of 2013, P Company still had in its books 2S percent of the inventory purchased from S Company. In 2014, the intercompany sia profit in ending inventory at the end of 2014? OA 544,800 les totalled $280.000 with 20 percent left in inventory at the end of the year. What is the unrealized O B. $10.400 OC.$11.200 O D.$56.000 Solution ANSWER IS C($ 11200) DETAIL WORKING IS GIVEN AS UNDER: INTER COMPANY SALE S= $ 280000 INVENTORY LEFT AT THE END =$280000X20%=$56000 UNREALISED PROFIT = $56000X25/125 = $11200 _S COMPANY USES A 25% MARKUP ON COST: AS SUCH IF COSY TO S COMPANY IS $100 THAN BY ADDING 25% ON COST(I.E.,$25) SELLING PRICE OF S COMPANY TO P COMPANY WILL BE $125 THAN UNREALISED PROFIT WILL BE 25/125.