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Can anyone please help me with this one??
I can understand why the answer is given as b??Thank in advance
Catfish has owned 75% of Shark for a number of years. During the year to
31 December 20X8 Shark sold goods to Catfish for $75,000. Catfish had resold 40% of
these goods by the year end. Shark applies a 25% mark-up on all sales.
By what amount should the consolidated retained earnings of Catfish at 31 December
20X8 be reduced in respect of these intragroup sales?
A $33,750
B $6,750
C $8,438
D $9,000- Topics: 0
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Shark revenue = 75,000 * 60% (40% resold by Catfish)=45,000
Cost = (45,000*100/125)= 36,000
Shark Profit =9,000
Group RE = % Catfish * Shark RE = 9,000 * 75% =6,750
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