Use the Following Information to Answer the Question(s) Below

Multiple Choice

Use the following information to answer the question(s) below.
Pouch Corporation acquired an 80% interest in Shenley Corporation on January 1, 2012, when the book values of Shenley's assets and liabilities were equal to their fair values. The cost of the 80% interest was equal to 80% of the book value of Shenley's net assets. During 2012, Pouch sold merchandise that cost $70,000 to Shenley for $86,000. On December 31, 2012, three-fourths of the merchandise acquired from Pouch remained in Shenley's inventory. Separate incomes (investment income not included) of the two companies are as follows:

-Swamp Co., a 55%-owned subsidiary of Pond Inc., made the following entry to record a sale of merchandise to Pond: All Swamp sales are at 125% of cost.One-fourth of this merchandise remained in the Pond's inventory at year-end.A working paper entry to eliminate unrealized profits from consolidated inventory would include a credit to Inventory in the amount of

A) $2,000.
B) $2,500.
C) $8,000.
D) $10,000.