Realized Profit Calculation — Two Years of Upstream Transfers In 2007, Perl Inc. resold for

$85,000 inventory it had purchased in 2006 for $60,000 from Seri Inc., its 60%-owned subsidiary.

Seri’s cost was $40,000. Also in 2007, Perl purchased for $600,000 inventory costing Seri

$450,000. At the end of 2007, Perl reported $100,000 of this 2007 intercompany-acquired inven¬

tory in its balance sheet, the remaining 2007 intercompany-acquired inventory having been resold for $475,000.

1. How much intercompany profit was realized in 2007?

2. For Module 1 only: Prepare the general ledger adjusting entry(ies) pertaining to unrealized in¬
tercompany profit at the end of 2007.