Reference no: EM132940484

Question - ABC Co. decided to open a branch in Manila. Shipments of merchandise to the branch totaled 54,000 which included a 20% mark-up on cost. All accounting records are to be kept at the home office. The branch submitted the following report summarizing its operations for the period ended December 31, 20x1.

Sales on account 74,000

Sales on cash basis 22,000

Collection of account 60,000

Expenses paid 38,000

Expenses unpaid 12,000

Purchase of merchandise for cash 26,000

Inventory on hand, Dec. 31; 80% from home office 30,000

Remittance to home office 55,000

Required -

1. How much is the branch inventory at cost?

2. How much is the profit (loss) of the branch as far as the home office is concerned?