P Company Sold Merchandise Costing $240,000 to S Company (90

Multiple Choice

P Company sold merchandise costing $240,000 to S Company (90% owned) for $300,000. At the end of the current year, one-third of the merchandise remains in S Company's inventory. Applying the lower-of- cost-or-market rule, S Company wrote this inventory down to $92,000. What amount of intercompany profit should be eliminated on the consolidated statements workpaper?

A) $20,000.
B) $18,000.
C) $12,000.
D) $10,800.