Reference no: EM133034784

Question - The following data were from the records of Harry Inc. and its Bacolod Branch for 2019:

	Home Office	Bacolod Branch
Sales	P1,590,000	P472,500
Inventory, January 1	172,500	66,750
Purchases	1,230,000	-
Shipments to branch	315,000
Shipments from home office	-	378,000
Inventory, December 31	213,750	87,750
Expenses	573,000	152,250

In 2019, Home Office billed Bacolod branch at 120% of cost which was lower by 5% than last year's.

Required -

1. By what amount will the retained earnings of the home office increase in its separate books?

2. By what amount will the reciprocal accounts in each of the separate statement of financial position of the home office and the branch increase/(decrease) at the end of the year?

3. In the published financial statements, the required balance of the Allowance for Overvaluation amount to in the separate books of the home office, how much will be credited to Income Summary-Branch?