Reference no: EM133139296

Questions -

Q1. Assume that a company has 0 beginning inventory. The home office consistently bills its branch for shipments at 130% of cost. During the period, the home office made total shipments of P780,000, at billed price, to the branch. The " allowance for markup " account had a net increase of P45,000 after year-end adjustments but before elimination entries. The individual financial statements of the branch reported gross profit of P15,000. How much is the true gross profit of the branch?

Q2. The home office consistently bills its branch for shipments at 120% of cost. On September 21, 20x1, the branch's warehouse was flooded and 70% of the stocks stored therein were destroyed. The undamaged inventory has a total selling price of P11,880. The following additional information was gathered: Inventory, beg. - at billed price - P120,000 : Shipments from home office during the period - P 120,000 : Sales - P 132,000 : Sales returns - P 6,600. Compute for the cost of inventory destroyed by flood.