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2
2
The
account Allowance in Branch Inventory has a balance of P242,000 before adjustment. The
beginning inventory of the branch from home office at cost is P370,000; the beginning inventory of the
branch from outsider is P35,000; purchases from outsider is P220,000. Determine the “cost of
goods available for sale” of the branch per branch record.
a. P1, 297, 000 c. P1, 465, 000
2. The Home office in Mandaluyong shipped merchandise costing P 80,000 to Makati branch
and paid for the freight charges of P 600. The home office bills the branch at 125% of cost. Makati
branch was subsequently instructed to transfer one-half of the merchandise to Bulacan branch wherein
Bulacan paid for P 200 freight. If shipment was made directly from Mandaluyong to Bulacan, the freight
cost would have been P 400. By how much will the Makati branch charge the Home Office account?
a. P50,300 c. P51,300
b. P0 d. P56,000
3. The Manila branch of the Great Company is billed for merchandise by the home office at 20% above
cost. The branch in turn prices merchandise for sales purposes at 25% above billed price. On February
16 all of the branch merchandise is destroyed by fire. No insurance was maintained. Branch accounts
show the following information: