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Eugenia Abarca
on Dec 10, 2024

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Malone Co. owned 70% of Bernard Corp.'s common stock. During November 2021, Bernard sold merchandise to Malone for $150,000. At December 31, 2021, 40% of this merchandise remained in Malone's inventory. For 2021, gross profit percentages were 25% of sales for Malone and 30% of sales for Bernard. The amount of intra-entity gross profit remaining in ending inventory at December 31, 2021 that should be eliminated in the consolidation process is:

A) $11,250.
B) $14,400.
C) $18,000.
D) $36,000.
E) $45,000.

Intra-entity Gross Profit

Gross profit that arises from transactions within the same entity, often eliminated in consolidated financial statements.

Consolidation Process

The procedure of combining the financial statements of separate but related entities to present as one entity for financial reporting.

  • Compute and comprehend the handling of intra-entity gross profit and its effect on the consolidated net income.
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Claudia SmithDec 15, 2024
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