Mug Company owns 80% of Spoon Corp.'s common stock. During October 2019 Spoon sold merchandise to Mug for 125,000. At December 31, 2019, one-half of the merchandise remained in Mug inventory. For 2019, gross profit percentages were 30% for Mug and 40% for Spoon.

Mug Company owns 80% of Spoon Corp.'s common stock. During October 2019 Spoon sold merchandise to Mug for 125,000. At December 31, 2019, one-half of the merchandise remained in Mug inventory. For 2019, gross profit percentages were 30% for Mug and 40% for Spoon.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The amount of unrealized intercompany profit in ending inventory at December 31, 2019 that should be eliminated in consolidation is:

Mug Company owns 80% of Spoon Corp.'s common stock. During October
2019 Spoon sold merchandise to Mug for 125,000. At December 31, 2019,
one-half of the merchandise remained in Mug inventory.
For 2019, gross profit percentages were 30% for Mug and 40% for Spoon.

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