The home office of Glendale Company, which uses the perpetual inventory system, bills shipments of merchandise to the Montrose Branch at a markup of 25% on the billed price. On August 31, 2005, the credit balance of the home office’s Allowance for Overvaluation of Inventories: Montrose Branch ledger account was $60,000. On September 17, 2005, the home office shipped merchandise to the branch at a billed price of

$400,000. The branch reported an ending inventory, at billed price, of $160,000 on September 30, 2005.

Prepare journal entries involving the Allowance for Overvaluation of Inventories:

Montrose Branch ledger account of the home office of Glendale Company on September 17 and 30, 2005. Show supporting computations in the explanations for the entries.