1. how much is the Net Income reported by the Branch? 2. how much is the True Income of the Branch?
1. how much is the Net Income reported by the Branch? 2. how much is the True Income of the Branch?
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter12: Fainancial Statement Analysis
Section: Chapter Questions
Problem 98.3C
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Question
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.
1. how much is the Net Income reported by the Branch?
2. how much is the True Income of the Branch?
3. how much is the Allowance for Overvaluation after adjustment?
![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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F76c894e3-57ae-4680-94d2-2fce2d254d5e%2Fbf088f80-04c7-4f44-9ae8-14858371876a%2Fvg3zs_processed.jpeg&w=3840&q=75)
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
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how much is the Allowance for Overvaluation after adjustment?
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