COMPLETE SOLUTION..

Questions 10 and 11 are based on the following information. PTT Corporation retails merchandise through its home office store and through a branch store in a distant city. Separate ledgers are maintained by the home office and the branch. The branch store purchases merchandise from the home office (at 120% of home office cost), as well as from outside supplies. Selected information from the December 31,2012 trial balances of the home office and branch is as follows: Additional information: - The entire difference between the shipment accounts is due to the practice of billing the branch at cost plus 20%. - The December 31, 2012 inventories are P40,000 and P20,000 for the home office and the branch, respectively. (The branch purchased 16% of its ending inventory from outside supplies.) - Branch beginning and ending inventories include merchandise acquired from home office is inventoried at 120% of home office cost. 10. What is the realized profit in branch inventory? a. P4,000 c. P2,800 b. 7,200 d. 4,400 11. What is the net income of the branch as far the home office is concern? a. P50,200 c. P10,600 b. 15,000 d. 12,200