1. Which of the following is not included in the computation of Cost of Goods identified with HO Sales will result to overstatement of COGS?

a. Beginning Inventory

b. Purchases

c. Shipments to Agency

d. Answer not given

2. The realized profit on merchandise sold by the branch is P5,000. Ending inventory was P10,000 wherein P2,500 is from supplier. The HO billed the branch at 125% of cost. Closing entries will include

a. Debit Merchandise Inventory Ending P7,500

b. Credit Purchases P2,500

c. Debit to Allowance for Overvaluation of Branch Inventory of P5,000

d. Debit to Allowance for Overvaluation of Branch Inventory of P1,000

3. Fresh Corporation shipped merchandise worth P95,000 to its Cebu branch at cost. Cebu has sales of P120,000 and operating expenses of P20,000. Home Office Current has a balance of P40,000 and ending inventory of P38,000. What is the correct balance of the Branch Current account in the books of the home office?

a. 103,000

b. 65,000

c. 40,000

d. 83,000

4. ABC Corp ships DEF Branch merchandisecostingP120,000.75% of these were sold by the branch for P141,000 Operating expenses of the branch amounted to P27,000. How much total comprehensive income will the branch report if merchandise is billed by HO to branch at 125%?

a. 6,000

b. 1,200

c. 24,000

d. 1,500