The home office sent merchandise costing P300,000 to Branch 1 at a gross profit of 20%. Freight on shipment paid by the home office is 2% of the billed price. After two days, Branch 2 encountered inventory shortage and the Branch 1 was instructed to shipped to Branch 2 the 60% of the inventory sent by the home office. Shipment to Branch 2 resulted to a transportation cost of P5,000 paid by Branch 1. The freight if the shipment will come directly from home office to Branch 2 is P8,000. The freight cost is assumed to be incurred on per unit basis. Which of the following entry is CORRECT regarding the above transactions? a. there will be an excess freight recognized in the book of the home office amounting to P4,500. b. branch 1 will debit the Home Office account for P234,500. c. branch 2 will debit the Home Office account for P224,000. d. the Home Office will debit Branch 2 for P235,500.
The home office sent merchandise costing P300,000 to Branch 1 at a gross profit of 20%. Freight on shipment paid by the home office is 2% of the billed price. After two days, Branch 2 encountered inventory shortage and the Branch 1 was instructed to shipped to Branch 2 the 60% of the inventory sent by the home office. Shipment to Branch 2 resulted to a transportation cost of P5,000 paid by Branch 1. The freight if the shipment will come directly from home office to Branch 2 is P8,000. The freight cost is assumed to be incurred on per unit basis. Which of the following entry is CORRECT regarding the above transactions?
a. there will be an excess freight recognized in the book of the home office amounting to P4,500.
b. branch 1 will debit the Home Office account for P234,500.
c. branch 2 will debit the Home Office account for P224,000.
d. the Home Office will debit Branch 2 for P235,500.
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