Question

In: Accounting

The Home Office ships merchandise to its branch at 20% above cost. The branch’s book shows...

The Home Office ships merchandise to its branch at 20% above cost. The branch’s book shows a beginning inventory of P135,000 (50% from outside purchase) and shipments from home office of P405,000. The ending inventory of the Branch amounted to P337,500 in which 60% is home office merchandise while the remaining balance is from outside purchases. The Branch purchased merchandise costing P317,500. The total sales and operating costs of the branch for the year amounted to P1,040,000 and P220,000 respectively.

What is the entry of the home office upon shipment of merchandise to the branch?

  1. Dr. Investment in Branch 405,000; Cr. Shipment to the Branch 337,500; Cr. Allowance for overvaluation 67,500 Mine
  2. Dr. Shipment from Home Office 405,000; Cr. Home Office Current 405,000
  3. Dr. Branch Current 405,000; Cr. Shipment to Branch 405,000
  4. None of the Choices

SHOW SOLUTION FOR THE FOLLOWING QUEDTIONS:

The Allowance for Overvaluation of Branch Inventory Account is adjusted by how much?

  1. P45,000
  2. P33,750
  3. P40,500
  4. P94,500

How much is the true ending inventory of the branch?

  1. P337,500
  2. P303,750
  3. P280,250
  4. P315,000

What is the post-closing balance in the Unrealized Profit in Branch Inventory Account?

  1. P40,500
  2. P94,500
  3. P78,750
  4. P33,750

How much is the total Cost of Goods Sold of the Branch?

  1. P475,000
  2. P270,000
  3. P520,000
  4. P225,000

What is the Overvaluation of Branch Ending Inventory?

  1. P78,750
  2. P33,750
  3. P94,500
  4. P40,500

How much is the true net income of the branch?

  1. P225,000
  2. P270,000
  3. P300,000
  4. P345,000

The Allowance for Overvaluation of Branch Inventory Account is adjusted to how much?

  1. P40,500
  2. P33,750
  3. P94,500
  4. 78,750

What is the amount of overvaluation of Cost of Goods Sold or undervaluation in income?

  1. 78,750
  2. P33,750
  3. P94,500
  4. P40,500

Solutions

Expert Solution

Profit 20%

ekkarill92 answered 1 year ago
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