Cost of goods sold of the branch in so far as the home office is concernedAdjusted balance of allowance for overvaluation Sparta Company set up a branch in a province. The entity and its branch provided the following data for thesecond year of branch operation:Home OfficeP2,000,000100,000BranchSales revenue to outside customersP100,00060,000Beginning inventoryPurchases from outside supplierShipment to branchShipment from home officeEnding inventoryOperating expenses800,000200,000400,000160,000300,000500,000100,00080,000The home office to branch markup based on cost is 25% this year and last year.• Twenty percent (20%) of the beginning inventory came from an outside supplier.Twenty-four percent (24%) of the ending inventory of the branch came from last year's shipment fromthe home office, while 50% came from the current year's shipment from the home office.

Given : 25% mark up sale by home office to Branch. 20 % of the beginning inventory came from…

Answered: home office is concerned Adjusted…

Business

Accounting

home office is concerned Adjusted balance of allowance for overvaluation

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Cost of goods sold of the branch in so far as the home office is concerned
Adjusted balance of allowance for overvaluation

Sparta Company set up a branch in a province. The entity and its branch provided the following data for the
second year of branch operation:
Home Office
P2,000,000
100,000
Branch
Sales revenue to outside customers
P100,000
60,000
Beginning inventory
Purchases from outside supplier
Shipment to branch
Shipment from home office
Ending inventory
Operating expenses
800,000
200,000
400,000
160,000
300,000
500,000
100,000
80,000
The home office to branch markup based on cost is 25% this year and last year.
• Twenty percent (20%) of the beginning inventory came from an outside supplier.
Twenty-four percent (24%) of the ending inventory of the branch came from last year's shipment from
the home office, while 50% came from the current year's shipment from the home office.

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