Selected information from the separate and consolidated balance sheets and income statements of Pare, Inc. and its subsidiary, Shel Co., as of December 31, 2006, and for the year then ended is as follows:

Pare

Shel

Consolidated

Balance sheet accounts

Accounts receivable

$ 52,000

$ 38,000

$ 78,000

Inventory

60,000

50,000

104,000

Income statement accounts

Revenues

$400,000

$280,000

$616,000

Cost of goods sold

300,000

220,000

462,000

Gross profit

$100,000

$ 60,000

$154,000

Additional information:

During 2006, Pare sold goods to Shel at the same markup on cost that Pare uses for all sales.

In Pare’s consolidating worksheet, what amount of unrealized intercompany profit was eliminated?

  1. $ 6,000
  2. $12,000
  3. $58,000
  4. $64,000