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What is the amount of overvaluation

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Question - ABC Company's has two merchandise outlets, its main store in Baguio City and its San Fernando City branch. For control purposes, all purchases are made by the main store and shipped to the San Fernando City branch at cost plus 10%. on January 1, 2021, the inventories of the main store in Baguio City and the San Fernando City branch are P13,600 and P3,960, respectively. During 2021, the main store purchases merchandise costing P40,000 and shipped 40% of it to the San Fernando City branch. At December 31, 2021, the following journal entry to prepare the books for the next accounting period was prepared:

SALES 32,000

INVENTORY 4,840

INVENTORY 3,960

SHIPMENTS FROM MAIN STORE 17,600

EXPENSES 10,480

MAIN STORE 4,800

Required - What is the amount of overvaluation that was realized from the branch sales.

Reference no: EM132972904

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