Question
Suluan. Inc. established a Branch in Jolo to distribute part of the goods purchased by the Home Office. The Home office prices inventory shipped to
Suluan. Inc. established a Branch in Jolo to distribute part of the goods purchased by the Home Office. The Home office prices inventory shipped to the Branch at 20% above cost. The following account balances were taken from the ledger maintained by the Home Office and the Branch:
Suluan, Inc. Jolo, Branch
Sales P480, 000 P168, 000
Beg. Inv. 96, 000 48, 000
Purchases 400, 000 -
Shipment to Branch 104, 000 -
Shipment fr HO - 124, 800
Operating expenses 57, 600 28, 800
End. Inv. 78, 400 38, 400
All of the branch inventory is acquired from the Home Office. On the basis of these account balances, the combined net income of the Home Office and the Branch is:
136, 000
56, 000
222, 400
105, 600
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