Pruitt Company owns 80% of Stoney Company’s common stock. During 2017, Stoney sold $400,000 of merchandise to Pruitt. At December 31, 2017, one-fourth of the merchandise remained in Pruitt’s inventory. In 2017, gross profit percentages were 25% for Pruitt and 30% for Stoney. The amount of unrealized intercompany profit that should be eliminated in the consolidated statements is:

a) $80,000.

b) $24,000.

c) $30,000.

d) $25,000.

Answer rating: 100% (QA)

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