The Following Information Pertains to Questions

question 29

Multiple Choice

The following information pertains to questions
Jones Corp owns 30% of Klein Inc for $250,000.During 2002,there were numerous intercompany inventory sales.During the year,Jones sold Inventory for $50,000 to Klein.At year-end,half of this Inventory was still in Klein's possession.Also during 2002,Klein sold Inventory for $60,000 to Jones.At year-end,20% of this Inventory was still in Jones' possession.During the year,Klein declared a net income and paid dividends in the amount of $20,000 and $5,000 respectively.Klein's fair values approximated its book values on the date of acquisition.Both companies price all sales at a 25% mark-up above cost.In addition,both companies are subject to an effective tax rate of 40%.
-What is the amount of after-tax profit realized from downstream sales during 2002?

• A)$8,000
• B)$5,000
• C)$3,000
• D)$4,000

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Definitions:

Tachycardia

A condition where the heart rate exceeds the normal resting rate, typically defined as a heart rate over 100 beats per minute in adults.

Substance Addiction

A chronic condition characterized by the compulsive use of substances despite harmful consequences, leading to mental and physical dependence.

Substance Abuse

The harmful or hazardous use of psychoactive substances, including alcohol and illicit drugs, leading to addiction or dependency.

Recreational Use

The use of substances such as drugs, alcohol, or marijuana for pleasure or leisure purposes rather than for medical reasons.