Reference no: EM133116378

Question - Selected income statement information for the two affiliates for the year 20X5 was as follows: Peanut Butter Company routinely receives goods from its 80%-owned subsidiary, Sinnamon Corporation. In 20X4, Sinnamon sold merchandise that cost $70,000 to Peanut Butter for $90,000. Half of this merchandise remained in Peanut Butter's December 31, 20X4 inventory. This inventory was sold in 20X5. During 20X5, Sinnamon sold merchandise that cost $150,000 to Peanut Butter for $210,000. One-third of the 20X5 merchandise inventory remained in Peanut Butter's December 31, 20X5 inventory.

	Peanut Butter	Sinnamon
Sales Revenue	$500,000	$400,000
Cost of Goods Sold	350,000	260,000
Other Expenses	50,000	70,000
Separate Net Incomes	$100,000	$70,000

Required -

1. What amount of unrealized profit was in Peanut Butter's inventory at the end of 20X5?

a. $60,000

b. $10,000

c. $20,000

d. $70,000

e. $30,000

2. What was Peanut Butter's income from Sinnamon in 20X5?

a. $56,000

b. $36,000

c. $32,000

d. $40,000

e. $48,000