The home office ships merchandise to the branch at 20 percent above cost. How should a shipment costing P100,000 be recorded by the home office?

Select one:

a.

(Dr) Investment in branch, P100,000 (Dr) Allowance for overvaluation of branch inventory, P20,000 (Cr) Shipments to branch, P120,000

b.

(Dr) Investment in branch, P120,000 (Cr) Allowance for overvaluation of branch inventory, P20,000 (Cr) Shipments to branch, P100,000

c.

(Dr) Investment in branch, P80,000 (Dr) Allowance for overvaluation of branch inventory, P20,000 (Cr) Shipments to branch, P100,000

d.

(Dr) Investment in branch, P100,000 (Cr) Allowance for overvaluation of branch inventory, P20,000 (Cr) Shipments to branch, P80,000