Question
Martindale Company, a 100% owned subsidiary of Weisman Corporation, sells inventory to Weisman at a 20% profit on selling price. The following data are available
Martindale Company, a 100% owned subsidiary of Weisman Corporation, sells inventory to Weisman at a 20% profit on selling price. The following data are available pertaining to inter-company purchases by Weisman:
Inter-company sales: | Unsold at year end (based on selling price): |
2020: | $18,000 | 2020: | $4,000 | |
2021: | $19,400 | 2021: | $6,000 | |
2022: | $21,500 | 2022: | $8,000 |
Martindale's profit numbers were $125,000, $142,000 and $265,000 for 2020, 2021, and 2022, respectively. Weisman received dividends from Martindale of $25,000 for 2020 and 2021, and $30,000 for 2022. Assume the acquisition was on January 1, 2020 and that Weisman uses the cost method to account for its investment in Martindale. Compute the amount of beginning of year [ADJ] adjustment necessary for consolidation for the year ended December 31, 2021.
Select one:
A. $125,000
B. $ 99,200
C. $100,000
D. $124,200
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