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1. A home office ships inventory to its branch at an amount above cost. By year-end, 75 percent of the inventory shipped to the branch
1. A home office ships inventory to its branch at an amount above cost. By year-end, 75 percent of the inventory shipped to the branch has been resold to outsiders. What entry must be made by the home office to record the inter-company realized profit during the year? a. Unrealized inter-company profit Realized profit of branch transfers b. Allowance for overvaluation of branch inventory Branch income c. Branch income Unrealized inter-company profit (:1. Both a and b are correct 2. Based on number 1 information, how is the realized inter-company profit determined? a. Billed price x 75 percent b. Billed price x 25 percent c. (Billed price less cost) x 75 percent CI. (Billed price less cost)x 25 percent
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