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Ede4ka [16]
2 years ago
14

P Company sold merchandise costing $240,000 to S Company (90% owned) for $300,000. At the end of the current year, one-third of

the merchandise remains in S Company's inventory. Applying the lower-of- cost-or-market rule, S Company wrote this inventory down to $92,000. What amount of intercompany profit should be eliminated on the consolidated statements workpaper?
Business
1 answer:
Ganezh [65]2 years ago
5 0

Answer:

Inter-company profit eliminated = $12,000

Explanation:

Given:

Value of inventory = $300,000  

Cost of inventory = $240,000

Computation of Profit recognized on sale profit

Profit recognized on sale = Value of inventory - Cost of inventory

Profit recognized on sale = $300,000 - $240,000

Profit recognized on sale = $60,000

Computation of Profit margin:

Profit margin = [60000/300000]×100 = 20%

Profit margin = 20% = 0.20  

Computation of closing Inventory :

Closing Inventory = $300,000 (1/3)

Closing Inventory = $100,000  

Profit during the year = $ 92,000  

Value of inventory = $100,000 (1-0.20)= $80,000

Inter-company profit eliminated= $92,000 - $80,000 = $12,000

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1040, 1040A and 1040EZ

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Answer:

Balance sheet extract:

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Explanation:

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3 years ago
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Answer:

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What are the three legal forms of business organization? What are their advantages and disadvantages?
algol13

Answer:

There are three legal forms of business organization that are sole proprietorship, society and corporation.

Explanation:

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Advantage:

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Disadvantages:

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<u>Company</u>: company that has two or more people. In general, partnership companies are larger than sole proprietorships. The most common companies in society are finance and insurance.

Advantage:

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Disadvantages:

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4 0
3 years ago
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