The Following Information Pertains to Questions

question 22

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 unrealized after-tax profit from upstream sales during 2002?

• A)$1,440
• B)$1,920
• C)$5,760
• D)$7,200