San Corporation, a 75 percent owned subsidiary of Par Corporation, sells inventory items to its parent at 125 percent of cost. Inventories of the two affiliates for 2011 are as follows:
|
Par |
San |
|
|
Beginning inventory |
$400,000 |
$250,000 |
|
Ending inventory |
500,000 |
200,000 |
Par’s beginning and ending inventories include merchandise acquired from San of $150,000 and $200,000, respectively, which is sold in the following year. If San reports net income of $300,000 for 2011, Par’s income from San will be:
a $255,000
b $217,500
c $215,000
d $195,000