PLEASE ANSWER THESE QUESTION. THANK YOU

Q #1

Perkins Company owns 85% of Sheraton Company. Perkins Company sells merchandise to Sheraton Company at 20% above cost (gross profit). During 2011 and 2012, such sales amounted to $400,000 and $500,000, respectively. At the end of each year, Sheraton Company had sold all of inventory purchased from Perkins to third parties. Calculate the amount of unrealized inventory profit for 2011 and 2012?

a. $400,000 for 2011 and $500,000 for 2012

b. $80,000 for 2011 and $100,000 for 2012

c. $0 for 2011 and $100,000 for 2012

d. $80,000 for 2011 and $0 for 2012

e. $0 for 2011 and $0 for 2012

Q #2

Perkins Company owns 85% of Sheraton Company. Perkins Company sells merchandise to Sheraton Company at 20% above cost (gross profit). During 2011 and 2012, such sales amounted to $400,000 and $500,000, respectively. At the end of each year, Sheraton Company had sold 50% of inventory purchased from Perkins to third parties. Calculate the amount of intercompany sales that need to be eliminated in 2011 and 2012?

a. $400,000 for 2011 and $500,000 for 2012

b. $80,000 for 2011 and $100,000 for 2012

c. $0 for 2011 and $0 for 2012

Q #3

What would be the workpaper entry to eliminate intercompany interest previously recorded?

a. Dr. Interest Income / Cr. Interest Expense

b. Dr. Interest Expense / Cr. Interest Income

Q #4

Revenue on sales between affiliated companies cannot be recognized until merchandise is sold outside of the consolidated entity, even if control is not present.

a. True

b. False

Q#5

The workpaper entry to eliminate intercompany sale of inventory is to Debit Sales and Credit Inventory:

a. True

b. False

Q #6

In the process of eliminating intercompany sales of inventory, as a working paper entry, we debit Sales and credit COGS (cost of inventory) and Inventory (intercompany unrealized gross profit):

a. True

b. False

Q #7

Unrealized inventory profit needs to be readjusted to COGS, if one of the intercompany sales of inventory have not been sold to 3rd parties.

a. True

b. False