ABC Co. has a branch operation in Morayta. Merchandise is shipped to the branch at a transfer price of 30% more than cost. At the end of 2022, ABC Co. has determined that the branch should be allocated common expenses but the branch has not yet been notified of the following allocated amounts: Marketing expense P15,000 Rent expense 10,000 Other expense 5,000 In addition, a shipment costing P25,000 is still in transit as of December 31, 2022 while a P12,000 branch remittance has not been received by the home office due to limited bank operations as of December 31. The branch’s accountant is unaware of the accounting treatment of shipments of inventory from the home office and has recorded these as normal purchases. The beginning accounts payable includes P130,000 payable to the home office. A trial balance of the home office and the branch, before any necessary adjustments, is provided: ABC Co. Branch Debits: Cash P 35,000 P 120,000 Accounts receivable 85,000 40,000 Investment in Branch 480,000 - Plant assets 400,000 238,500 Purchases 450,000 240,000 Depreciation expense 15,000 10,000 Marketing expense 70,000 15,000 Rent expense 15,000 6,000 Other expense 30,000 5,000 Inventory 1/1/2022 125,000 40,000 Credits: Accumulated depreciation P 100,000 P 24,000 Accounts and other payables 191,500 406,500 Allowance for overvaluation 58,500 Home office – current - 74,000 Ordinary share capital 150,000 - Share premium 155,000 - Retained earnings, 1/1/2022 250,000 - Sales 490,000 340,000 Shipments to Branch 180,000 - Inventory as of December 31, 2022 per physical inventory count made amounted to P50,000 for the home office and P45,000 for the branch. It was determined that P19,500 and P39,000 of the inventory of the branch came from the home office as of January 1, 2022 and December 31, 2022, respectively. How much is the cost of goods sold to be presented in the Combined Statement of Comprehensive Income for 2022?
ABC Co. has a branch operation in Morayta. Merchandise is shipped to the branch at a transfer price of 30% more than cost. At the end of 2022, ABC Co. has determined that the branch should be allocated common expenses but the branch has not yet been notified of the following allocated amounts:
|
Marketing expense |
P15,000 |
|
Rent expense |
10,000 |
|
Other expense |
5,000 |
In addition, a shipment costing P25,000 is still in transit as of December 31, 2022 while a P12,000 branch remittance has not been received by the home office due to limited bank operations as of December 31.
The branch’s accountant is unaware of the accounting treatment of shipments of inventory from the home office and has recorded these as normal purchases. The beginning accounts payable includes P130,000 payable to the home office.
A
|
|
ABC Co. |
|
Branch |
|
Debits: |
|
|
|
|
Cash |
P 35,000 |
|
P 120,000 |
|
|
85,000 |
|
40,000 |
|
Investment in Branch |
480,000 |
|
- |
|
Plant assets |
400,000 |
|
238,500 |
|
Purchases |
450,000 |
|
240,000 |
|
|
15,000 |
|
10,000 |
|
Marketing expense |
70,000 |
|
15,000 |
|
Rent expense |
15,000 |
|
6,000 |
|
Other expense |
30,000 |
|
5,000 |
|
Inventory 1/1/2022 |
125,000 |
|
40,000 |
|
|
|
|
|
|
Credits: |
|
|
|
|
Accumulated depreciation |
P 100,000 |
|
P 24,000 |
|
Accounts and other payables |
191,500 |
|
406,500 |
|
Allowance for overvaluation |
58,500 |
|
|
|
Home office – current |
- |
|
74,000 |
|
Ordinary share capital |
150,000 |
|
- |
|
Share premium |
155,000 |
|
- |
|
|
250,000 |
|
- |
|
Sales |
490,000 |
|
340,000 |
|
Shipments to Branch |
180,000 |
|
- |
Inventory as of December 31, 2022 per physical inventory count made amounted to P50,000 for the home office and P45,000 for the branch. It was determined that P19,500 and P39,000 of the inventory of the branch came from the home office as of January 1, 2022 and December 31, 2022, respectively.
How much is the cost of goods sold to be presented in the Combined Statement of Comprehensive Income for 2022?
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