P Ltd owns $75\%$ of the ordinary shares of S Ltd $($a subsidiary$).$ The sales, cost of sales and gross profit of the two companies are as follows:

P Ltd S Ltd

$\text{'}000\text{'}000$

Sales $8,0003,000$

Cost of sales $(5,000)(2,000)$

Gross profit $3,0001,000$

During the year P Ltd sold goods to S Ltd for $1,200,000$ and one$-$fourth of these goods remain unsold with S Ltd by the year$-$end. P Ltd invoices goods to S Ltd at a mark$-$up of $20\%.$

The consolidated gross profit equals to:

Question $6$Answer

a$.$

$4,060,000$

b$.$

$3,950,000$

c$.$

$4,050,000$

d$.$

$3,800,000$