Brave Company maintains a branch in Davao City and makes inventory shipment to its branch at 20% above cost. Selected balances taken from the books of Home Office and Branch as of December 31, 2021 are as follows (see image below).

P24,350 of the branch's ending inventory came from outside suppliers.

 

Determine the following:

How much is the Inventory on January 1 of the Branch that came from the Home Office?

How much is the Net Income reported by the Branch?

How much is the True Income of the Branch?

How much is the Allowance for Overvaluation after adjustment?

Transcribed Image Text:

Sales Inventory, 01/01/2021 Purchases Shipment to Branch/from HO Allowance for Overvaluation Inventory, 12/31/2021 Home Office 3,500,000 120,000 2,850,000 750,000 157,500 104,000 Branch 2,000,000 80,000 330,000 876,000 54,350 Sales Inventory, 01/01/2021 Purchases Shipment to Branch/from HO Allowance for Overvaluation Inventory, 12/31/2021 Home Office 3,500,000 120,000 2,850,000 750,000 157,500 104,000 Branch 2,000,000 80,000 330,000 876,000 54,350

Answer rating: 100% (QA)

Inventory on January 1 of the Branch that came from ... View the full answer