Angelo Limited Sold Inventory to Its Parent Entity at a Profit

question 9

Multiple Choice

Angelo Limited sold inventory to its parent entity at a profit of $4 000. The inventory cost Angelo Limited $16 000. At the end of the reporting period the parent had sold 50% of the inventory to an external party. The consolidation adjustment entry (excluding tax effects) will eliminate unrealised profit amounting to:

• A) $2 000
• B) $4 000
• C) $12 000
• D) $16 000

Grasp the mechanisms of profit and loss distribution in a partnership based on the income ratio.

Understand the procedures for the admission of a new partner into an existing partnership and the financial implications thereof.

Comprehend how capital accounts and drawing accounts reflect partners' investments and withdrawals.

Recognize the procedures and accounting for partner withdrawals and the impact on partnership finances.

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Definitions:

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