FRConsolidation - Intragroup current accounts

P has owned 60% of issued equity share capital of S. At 31 Oct 2007 the individual statements of FP include: P’s Current Assets $700,000 P’s Current Liabilities $300,000 S’s Current Assets $500,000 S’s Current Liabilities $200,000 During the year ended 31 Oct 07, P made $100,000 Sales on Credit to S. S had one quarter of these goods in inventory at 31 Oct 07. P makes a 20% gross profit margin on all sales. On 31 Oct 07, S sent a cheque for $50,000 to pay all of the outstanding balance due to P. P did not receive this cheque until 2 November 2007 Answer = Current Assets $1.195m and Current Liabilities $0.5m I know the PURP = (1/4 x 100,000 x 0.2) = $5000 But how did they arrive at the answer especially the Current Liabilities Can you please go through it and give me the rationale please I don’t understand