Gargiulo Company, a 90% owned subsidiary of Posito Corporation, transfers inventory to Posito at a 25% gross profit rate. The following data are available pertaining specifically to Posito's intra-entity purchases from Gargiulo. Gargiulo was acquired on January 1, 2017. 201720182019Purchases by Posito$8,000 $12,000 $15,000 Ending inventory on Posito's books 1,200 4,000 3,000 ??Assume the equity method is used. The following data are available pertaining to Gargiulo's income and dividends.? 201720182019Gargiulo's net income$70,000 $85,000 $94,000 Dividends paid by Gargiulo 10,000 10,000 15,000 ?For consolidation purposes, what amount would be debited to January 1 retained earnings for the 2017 consolidation worksheet entry with regard to the unrecognized
intra-entity gross profit remaining in ending inventory with respect to the 2017 intra-entity transfer of merchandise?
A. $240.
B. $1,600.
C. $270.
D. $300.
E. $0.
Answer: E
Business
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