Par Corporation owns an 80% interest in Sel Corporation acquired several years ago. Sel regularly sells merchandise to its parent at 125% of Sels cost. Gross profit data of Par and Sel for 20X2 are as follows:

	Par	Sel
Sales	$1,000,000	$800,000
Cost of goods sold	800,000	640,000
Gross Profit	$ 200,000	$160,000

During 20X2, Par purchased inventory items from Sel at a transfer price of $400,000. Pars December 31, 20X1 and 20X2 inventories included goods acquired from Sel of $100,000 and $125,000, respectively. Assume Par sells the inventory purchased from Sel in the following year.

The unrealized profits in the year-end 20X1 and 20X2 inventories were:

Select one:

a.

$100,000 and $125,000, respectively

b.

$80,000 and $100,000, respectively

c.

$20,000 and $25,000, respectively

d.

$16,000 and $20,000, respectively