Pruitt Company Owns 80% of Stoney Company's Common Stock

Multiple Choice

Pruitt Company owns 80% of Stoney Company's common stock. During 2017, Stoney sold $400,000 of merchandise to Pruitt. At December 31, 2017, one-fourth of the merchandise remained in Pruitt's inventory. In 2017, gross profit percentages were 25% for Pruitt and 30% for Stoney. The amount of unrealized intercompany profit that should be eliminated in the consolidated statements is:

A) $80,000.
B) $24,000.
C) $30,000.
D) $25,000.