Question

Question 1 6 points Save Answer Harpo's Jelly Beans and Callie's Candy Shop are related entities. Harpo's Jelly Beans transfers inventory to Callie's Candy Shop for $12,000 Harpo's Jelly Beans originally purchased the inventory for $7.200 from its vendor. Callie's Candy Shop sells 30 % of the inventory during the year to an unrelated customer for $6,000. What amount will be credited to Inventory in the consolidation eliminating entry? a. $3,360 b. $3,600 Oc. $12,000 d $2,160 Question 1 of 4 Moving to another question will save this response. 1ax estimate application & summer

Answer 1

In consolidated accounting the out of remaining balance of the inventory
the part of unearned profit should be credited to the inventory account.
Let us calculate it.
	Intercompany Sales		$ 12,000.00
	Less: Sales to outside		$   3,600.00
	(30% of 12000)
	Inventory		$   8,400.00
	Less:
	Actual Cost to Harpo Jelly Beans		$   5,040.00
	(7200-30%)
	Intercompany sales profit		$         3,360
	to be credited to the inventory account
	Therefore the option "a" is correct.