3. Included in the ending inventory of Company P, the parent, is merchandise purchased from Company S, the subsidiary, with sales value of $30,000. Company S has an average markup on its sales of 40% of selling price. The profit in the ending inventory which must be eliminated is
A. $18,000
B. $12,000
C. $8,571
D.$0

4. Company P, the parent, purchased, 75% of the outstanding shares of Company S, the subsidiary, two years prior to end of the current year. Company P advanced Company S $100,000 on a long-term 5% note which due is five years from now in one payment. Included in the receivables and payables of the two companies is accrued interest on the unpaid balance of this note for the last three months of the current year. Except for this accrual , interest has been fully paid on the note, What is the correct eliminating entry on the work sheet?
A. Current liabilities 1,250.00
Notes payable 75,000.00
Notes receivable 76,250.00
B. Current liabilities 937.50
Notes payable 75,000.00
Notes receivable 75,937.50
C. Current liabilities 1,250.00
Notes payable 100,000.00
Notes receivable 101,250.00
D. Current liabilities 937.50
Notes payable 100,000.00
Notes receivable 100,937.50

i really need help with these two questions... bc i think # 3 is C but im not sure... and # 4 is B not sure... please help me!

The Summarized balance sheets of the Sun Company and the Moon Company as of December 31, 19x4, are as follows:

SUN COMPANY
Balance Sheet
December 31, 19x4

Assets $600,000
Liabilities $150,000
Capital stock 300,000
Retained earnings 150,000
Total equities $600,000

MOON COMPANY
Balance Sheet
December 31, 19x4
Assets $400,000
Liabilities $100,000
Capital stock 250,000
Retained Earnings 50,000
Total equities 400,000

5. If the Sun Company acquired a 100% interest in the Moon Company on December 31, 19x4, for $270,000, and if during 19x5 the Moon Company had net income of $22,000 and paid a cash dividend of $7,000, applying the cost method would give a debit balance in the Investment in Stock account of the Moon Company at the end of 19x5 of
A. $285,000
B. $283,500
C. $276,300
D. $270,000
(D) not sure

6. If the Sun Company acquired a 100% interest in the Moon Company on December 31, 19x4, for $270,000, and if during 19x5 the Moon Company had net income of $30,000 and paid a cash dividend of $15,000, applying the equity method would give a debit balance in the Investment in Stock account of the Moon Company at the end of 19x5 of
A. $285,000
B. $283,500
C. $276,300
D. $270,000
(A) not sure

Help is appreciated!

ABCF4360, if you'd permit me to crash the party for a second with a bit o' help...

With respect to Q4, we can break down the info contained in the 'givens' to point us to the answer: We know from the layout that subsidiary S should have, among its current liabilites at year end, 3 months' worth of interest payable, computed on a 100K face amount, 5% note. (All the interest has been paid, except for the last three months of the year.)

Also, we're told that the principal of the note is payable in full at maturity. Thus, there have been no principal pay-downs, meaning that subsidiary S should still be showing 100K as Note Payable.

Choice (C) is the only one meeting both of these criteria. Hope this helps!

3. The correct answer is B $12,000 which is 40% of 30,000. This represents unrealized profit on inventory.
4. Eliminate Accrued liability $1,250 three months interest, and the full amount of note $100,000. Correct answer is C
5. Under cost method, the investment will be reported at $270,000. Answer D is correct. Cost method reports the amount at its original cost
6. Under equity method, the answer is A $285,000: $270,000 + 30,000 - 15,000. Equity method considers the reported income less dividends paid