E5-5 Upstream sales Pam Corporation owns an 80 percent interest in Sun Corporation acquired several years ago. Sun regularly sells mer- chandise to Pam at 125 percent of Sun's cost. Gross profit data of Pam and Sun for 2017 are as follows: Pam Sun Sales $1,000 $800 Cost of goods sold 800 640 Gross profit $ 200 $160 During 2017, Pam purchased inventory items from Sun at a transfer price of $400. Pam's December 31, 2016 and 2017, inventories included goods acquired from Sun of $100 and $125, respectively. Assume Pam sells the inventory purchased from Sun in the following year. 1. Consolidated sales of Pam Corporation and Subsidiary for 2017 were: a $1,800 b $1,425 C$1,400 d $1,240 2. The unrealized profits in the year-end 2016 and 2017 inventories were: a $100 and $125, respectively $80 and $100, respectively c $20 and $25, respectively d $16 and $20, respectively 3. Consolidated cost of goods sold of Pam Corporation and Subsidiary for 2017 was: a $1,024 b $1,045 C$1,052.8 d $1,056