the Company and its branch on December 31, 2021. It is the company's policy to bill all branches for merchandise shipments at 30% above cost. Determine: a. How much of the branch inventory on January represents purchases from outsiders? b. Assuming that the branch ending inventory acquired from home office is P 46,800 at billed price, what is the net income (loss) of the branch insofar as the home office is concerned? * Shipments to branch Allowance for overvaluation of branch inventory Shipments from home office Purchases (from outsiders) Merchandise inventory, January 1 Merchandise inventory, December 31 Sales Home Office Books P 360,000 119,880 Branch Books P 468,000 173,520 65,520 58,500 648,000

the Company and its branch on December 31, 2021. It is the company's policy to bill all branches for merchandise shipments at 30% above cost. Determine: a. How much of the branch inventory on January represents purchases from outsiders? b. Assuming that the branch ending inventory acquired from home office is P 46,800 at billed price, what is the net income (loss) of the branch insofar as the home office is concerned? * Shipments to branch Allowance for overvaluation of branch inventory Shipments from home office Purchases (from outsiders) Merchandise inventory, January 1 Merchandise inventory, December 31 Sales Home Office Books P 360,000 119,880 Branch Books P 468,000 173,520 65,520 58,500 648,000

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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Concept explainers

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.

Question

the Company and its branch on December 31, 2021. It is the company's
policy to bill all branches for merchandise shipments at 30% above cost.
Determine: a. How much of the branch inventory on January represents
purchases from outsiders? b. Assuming that the branch ending inventory
acquired from home office is P 46,800 at billed price, what is the net
income (loss) of the branch insofar as the home office is concerned? *
Home Office
Books
P 360,000
119,880
Branch Books
Shipments to branch
Allowance for overvaluation of branch inventory
Shipments from home office
Purchases (from outsiders)
Merchandise inventory, January 1
Merchandise inventory, December 31
Sales
P 468,000
173,520
65,520
58,500
648,000
61,200
Expenses

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Step 1: Define merchandise inventory

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Step 2: A. Calculation of merchandise purchase on January

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Step 3: B. Calculation of net income

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