King Corporation owns 80% of Lee Corporation's common stock. During October, Lee sold merchandise to King for $100,000. At Dec 31, 50% of this merchandise remains in King's inventory. Gross profit percentages were 30% for King and 40% for Lee. The amount of unrealized intercompany profit in ending inventory at Dec 31 that should be eliminated in the consolidation process is? (AICPA adapted)
This solution provides an explanation for a question involving a company's profit.