YE Company ships inventory to its branch at a mark-up of 125% of cost. The required balance of the allowance for overvaluation account is P1,425,000. During the year, the home office sent merchandise to the branch costing P9,000,000. At the start of the year, the branch's Statement of Financial Position shows P1,800,000 of inventory on hand that was acquired from the home office. How much is the amount to be debited to the allowance for overvaluation in branch inventory at the end of the year? A.1,225,000 B.2,610,000 C.1,425,000 D.1,185,000

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A: Working:

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A: Formula: Overvaluation of branch inventory account = Cost of goods sold x Mark up percentage

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A:

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