On 1 July 2012, King Ltd purchased 65% of the share capital to gain control of Earl Ltd. The following intra-group transactions took place for the year ended 30 June 2013: Earl Ltd paid an interim dividend of $170,000 to its shareholders from current year's profits. Earl Ltd declared a final dividend of $240,000 to its shareholders from current year's profits. Inventory which cost $360,000 was sold by King Ltd to Earl Ltd for $470,000. At year end 35% of that inventory remained on hand with Earl Ltd. Earl Ltd paid King Ltd, a management fee for administrative services they provided of $32,000. Earl Ltd has an intra-group loan with King Ltd (King provided loan) of $1,500,000. The loan charges 6.75% interest annually. The interest for the current year remains unpaid at year end. Earl Ltd performed consulting services for King Ltd for which Earl Ltd received revenue of $330,000. Half of this amount remains unpaid at year end. Required: a) Prepare the journal entries required to eliminate the intra-group transactions above. b) Explain how the unrealised profit on intra-group transactions is dealt with on consolidation.