Questions 5 and 6 are based on the following information. Auto Supply Company is engaged in merchandising both at its home office in Cebu City and its branch in Toledo City Selected accounts taken from the trial balances of the home office and the branch as of December 31, 2012 follow: Debits Inventory, January 1, 2012 Toledo Branch Purchases Freight in from home office Sundry Expenses Credits Home Office Sales Sales to branch Allowance for Overvaluation of branch inventory at January 1, 2012. Cebu City P 23,000 58,300 190,000 52,000 P155,000 110,000 Home office, at cost...... Branch, at billed price (excluding freight of P520....... 5. What is the net income of the home office from own operations? a. P30,470 c. P21,000 b. P20,000 d. P30,470 1,000 Additional information: The Toledo City branch gets all of its merchandise from the home office. The home office bills the goods at cost plus a 10% mark-up. At December 31, 2012, a shipment with a billed value of P5,000 was still in transit. Freight on this shipment was P250 and is to be treated as part of the inventory. • Inventories on December 31, 2012, excluding the shipment in transit, follow: P30,000 10,000 6. What is the net income of the branch in so far as the home office is concerned? a. P870 b. P10,470 c. P1,500 d. P12,000 Toledo Branch P 11,550 105,000 5,500 28,000 P 53,300 140,000
Questions 5 and 6 are based on the following information. Auto Supply Company is engaged in merchandising both at its home office in Cebu City and its branch in Toledo City Selected accounts taken from the trial balances of the home office and the branch as of December 31, 2012 follow: Debits Inventory, January 1, 2012 Toledo Branch Purchases Freight in from home office Sundry Expenses Credits Home Office Sales Sales to branch Allowance for Overvaluation of branch inventory at January 1, 2012. Cebu City P 23,000 58,300 190,000 52,000 P155,000 110,000 Home office, at cost...... Branch, at billed price (excluding freight of P520....... 5. What is the net income of the home office from own operations? a. P30,470 c. P21,000 b. P20,000 d. P30,470 1,000 Additional information: The Toledo City branch gets all of its merchandise from the home office. The home office bills the goods at cost plus a 10% mark-up. At December 31, 2012, a shipment with a billed value of P5,000 was still in transit. Freight on this shipment was P250 and is to be treated as part of the inventory. • Inventories on December 31, 2012, excluding the shipment in transit, follow: P30,000 10,000 6. What is the net income of the branch in so far as the home office is concerned? a. P870 b. P10,470 c. P1,500 d. P12,000 Toledo Branch P 11,550 105,000 5,500 28,000 P 53,300 140,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Questions 5 and 6 are based on the following information.
Auto Supply Company is engaged in merchandising both at its home office in Cebu City and its branch in Toledo City.
Selected accounts taken from the trial balances of the home office and the branch as of December 31, 2012 follow:
Debits
Inventory, January 1, 2012
Toledo Branch
Purchases
Freight in from home office
Sundry Expenses
Credits
Home Office
Sales
Sales to branch
Allowance for Overvaluation of branch inventory at
January 1, 2012.
Cebu City
P 23,000
58,300
190,000
52,000
P155,000
110,000
Home office, at cost......
Branch, at billed price (excluding freight of P520....
5. What is the net income of the home office from own operations?
a. P30,470
b. P20,000
c. P21,000
d. P30,470
1,000
Additional information:
The Toledo City branch gets all of its merchandise from the home office. The home office bills the goods at
cost plus a 10% mark-up. At December 31, 2012, a shipment with a billed value of P5,000 was still in
transit. Freight on this shipment was P250 and is to be treated as part of the inventory.
Inventories on December 31, 2012, excluding the shipment in transit, follow:
P30,000
10,000
6. What is the net income of the branch in so far as the home office is concerned?
a. P870
b. P10,470
c. P1,500
d. P12,000
Toledo Branch
P 11,550
105,000
5,500
28,000
P 53,300
140,000
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