What Is the Amount of Unrealised Profit That Needs to Be

Multiple Choice

What is the amount of unrealised profit that needs to be eliminated at the end of the period,in the following situation,where Morecombe Limited is the parent of Wise Limited? (Ignore the tax effect) Morecombe purchases 500 units of inventory for $20 each.Morecombe sells this entire inventory to Wise at a mark up of 25 per cent.Wise then sells half of the inventory to an external party.Half of the remaining amount (after the external sale) is sold back to Morecombe for $2,500.

A) Cannot determine from the information given.
B) $300.
C) $625.
D) $1 250.
E) $2 500.