P Company sold merchandise to a subsidiary for $64,000. Gross profit rate is 40%.

Question # 00695583 Posted By: swifire Updated on: 06/08/2018 01:34 AM Due on: 12/31/2019
Subject Accounting Topic Accounting Tutorials:
Question
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Complete the following. Marks are allocated for before tax unrealized profit and after tax unrealized profit. Show calculations for possible part marks.

a) P Company sold merchandise to a subsidiary for $64,000. Gross profit rate is 40%. At year end, 20% of this remains unsold. The tax rate is 30%. What is the before tax and after-tax unrealized profit in ending inventory? Please highlight the after-tax unrealized profit in yellow. (2 marks)

Clearly indicate your answers as shown below:

  • Calculations:
  • Before tax unrealized profit:
  • After tax unrealized profit:

b) P Company sold merchandise to a subsidiary for $63,000. The mark-up on cost in 50%. At year end. 20% of this remains unsold. The tax rate is 30%. What is the before tax and after tax unrealized profit in ending inventory? Please highlight the after-tax unrealized profit in yellow. (2 marks)


Clearly indicate your answers as shown below:
  • Calculations:
  • Before tax unrealized profit:
  • After tax unrealized profit:
C) AB Company issued a 10 year, 5%, $2,000,000 bond paying interest twice a year at a market rate of 4.2%. What was the issue price? Please highlight the issue price in yellow. (2 marks)
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  1. Tutorial # 00695215 Posted By: swifire Posted on: 06/08/2018 01:38 AM
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