Realized Profit Calculation Two Years of Upstream Transfers In 2007, Perl Inc. resold for $85,000 inventory
Question:
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.
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