The home office consistently bills it branch for shipments at 120% of cost. However, shipments to branch are subject to 5% freight cost in billed price, which the home office prepays before shipment. The following information was taken from the records of the branch. Cash and cash equivalents- Jan 1 Sales 60,000 22,000 Shipments from office at Accounts Receivable- Jan. 1 86,000 billed price, excluding freight-in 360,000 Inventory, Jan. 1 Purchases 50,000 From outside purchases 18,000 Inventory, Dec. 31 From home office at billed price (including freight-in) 126.000 144,000 -From outside purchases 6,000 Equipment, net Jan. 1 400,000 Accounts Payable- Jan. 1 120,000 -From home office (at billed price, including freight-in) 176.400 182,400 Requirements: a. Beginning balance of home office account. b. Beginning and ending balance of inventory at cost. c. Understatement or overstatement in the "cost of good sold" and "gross profit" of the branch as far as the home office is concerned.