$200,000 Shipment from Home Office   $444,000 The branch acquires all of its merchandise from the Home Office. The inventories of the Branch at billed prices are:

Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 56P: The following selected information is taken from the financial statements of Arnn Company for its...
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The following are extracted from the records of DONATELLO CO. and its branch MICHELANGELO Co. on December 31, 2008, the third year of the corporation's existence:

  DONATELLO CO. MICHELANGELO CO.
Allowance for Overvaluation $72,500  
Sales   $600,000
Expenses   $200,000
Shipment from Home Office   $444,000

The branch acquires all of its merchandise from the Home Office.

The inventories of the Branch at billed prices are:

  • January 1, 2008-$47,717.18
  • December 31, 2008-$84,000

Determine the branch profit-adjusted.

a)107,500

b)49,000

c)25,766

d)58,500

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