Unrealized intercompany profit in ending inventory

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Prince Corp. owned 80% of Kile Corp.'s common stock. During October 2006, Kile sold merchandise to Prince for $140,000. At December 31, 2006, 50% of this merchandise remained in Prince's inventory. For 2006, gross profit percentages were 30% of sales for Prince and 40% of sales for Kile. The amount of unrealized intercompany profit in ending inventory at December 31, 2006 that should be eliminated in the consolidation process is :

a) $28,000

b) $56,000

c) $22,400

d) $42,000

Reference no: EM13152263

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