9600 Net Income of Davao Branch adjusted P 10470 BP Cost Allowan ce MI 1120x4

9600 net income of davao branch adjusted p 10470 bp

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9,600 Net Income of Davao Branch, adjusted …………………………. P 10,470 BP Cost Allowan ce MI. 1/1/20x4 1,000 Shipments 110,00 0 100,000 **10,0 00 Available for sale 11,000 -: MI, 12/31/x4 ***15,4 00 ****1,4 00 CGS 9,600 **110,000 x 10/110 ***10,400 + 5,000, in transit
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****15,400 x 10/110 32. a Inventory, 1/1 at billed price…………………………………….. P165,000 Add: Shipments at billed price………………………………….. 110,000 Cost of goods available for sale at billed price ……………… P275,000 Less: CGS at BP: Sales……………………………………………………………… P169,000 Less: Sales returns and allowances ………………….. 3,750 Sales price of merchandise acquired from outsiders (P7,500 / 120%)…………………………… 9,000 Net Sales of merchandise acquired from home office ……………………………………….. P156,250 x: Intercompany cost ratio ………………………………... 100/125 125,000 Inventory, 8/1/2008 at billed price……………………………… P150,000 x: Cost ratio …………………………………………………………….. 100/125 Merchandise inventory at cost destroyed by fire ………………… P120,000 33. d Freight actually paid by: Home Office……………………………………………………………… ……P 500
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Branch P…………………………………………………………………… …… 700 Total………………………………………………………………… ……………P 1,200 Less: Freight that should be recorded…………………………………………….. 800 Excess freight……………………………………………………………………… ……P 400 34. d – in arriving at the cost of merchandise inventory at the end of the period, freight charges are properly recognized as a part of the cost. But a branch should not be charged with excessive freight charges when, because of indirect routing, excessive costs are incurred. Under such circumstances, the branch acquiring the goods should be charged for no more than the normal freight from the usual shipping point. The office directing the inter-branch transfers are responsible for the excessive cost should absorb the excess as an expense because it represents management mistakes (or inefficiencies.) 35. c Inventory of the Branch: Shipments from home office at billed price ......................................... P 37,700 X: Ending inventory % ................................................................................ 60% Ending inventory at billed price……………………………………...……P 22,620 Add: Freight (P1,300 x 60%) ……………………………………………… ...... 780 P 23,400 Or, P39,000 x 60% = P23,400 36. b
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Inventory in the published balance sheet, at cost Shipments at cost………………………………… .......................................... P 32,500 X: Ending inventory % .................................................................................... 60% Ending inventory at billed price……………………………………………….P19,500 Add: Freight (P1,300 x 60%) ………………………………………… ....... …….. 780 P 20,280 37. c Home Office Books Davao Branch Baguio Branch Davao Branch… 39,000 STB, cost……. 32,500 Unrealized profit 5,200 Cash (freight)….
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