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(a) What is meant by unrealised profit on inventory? (b) During August 2013, S Ltd sold goods to P Ltd at invoice value $250,000 on

(a) What is meant by unrealised profit on inventory?

(b) During August 2013, S Ltd sold goods to P Ltd at invoice value $250,000 on which S Ltd earned a mark-up of 25%. At the reporting date, August 31, 2013, P Ltd had one half of these goods in inventory. Show the necessary journal entry in the consolidated workings for the year ended August 31, 2013.

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