Reference no: EM132651813

The following transactions were entered in the branch current account of The Fort Head Office for the year 2018:

                      Branch Current-Rockwell Beg.

Balance, 1/1/18 2,296,290                         166,500 Collection of AR, 9/12/18

Shipments to branch, 4/1/18 1,062,000

Cash forwarded, 6/1/18 75,000

Operating Expenses charged to the branch, 12/31/18 14,400

• Shipments to the branch during the year were made at 20% above cost.
• The balance of allowance for overvaluation of Branch Inventory account was P106,500 at the beginning, and allowance was written down to P73,500 at year-end.
• On December 10, 2018, the home office purchased a piece of equipment amounting to P180,000 for its branch Rockwell. The said equipment has a useful life of five years and will be carried in the books of the branch, but the home office recorded the purchase debiting Equipment.
• The branch recorded depreciation of the equipment by debiting the Home Office Current account and crediting Accumulated Depreciation.
• Debit memo regarding allocation of operating expenses to the Rockwell branch was received by the branch January 2, 2019.
• The Rockwell branch reported net income of P988,650
• It also remitted cash to the home office on December 31, 2018 amounting to P165,000, which the home office received and recorded January 2,2019.
• The interoffice accounts were in agreement at the beginning of the year.

Required:

Question 1: How much is the net income of Rockwell branch that will be reported in the combined income statement of The Fort Company?

Question 2: What is the amount of the Home Office Current account that will be reported in the books of Rockwell branch after closing entries are made?