Reference no: EM132623468

The Home Office of Gledndale Company, which uses the perpetual inventory system, bill shipments of merchandise to the Montrose Branch at a markup of 25% on the billed price. On August 31, Year 5, the credit balance of the home office's Allowance for Overvaluation of Inventories:

• Montrose Branch ledger account was K600,000.
• On September 17, Year 5, the home office shipped merchandise to the branch at a billed price of K400,000.
• The branch reported an ending inventory, at billed price, of K160,000 on September 30, Year 5.

Required:

Problem 1: Prepare Journal entries involving the Allowance for Over-valuation of Inventories: Montrose Branch ledger account of the home office of Glendale Company on September 17 and 30, Year 5. Show supporting computations in the explanations for the entries