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Question - It is the policy of the home office to bill the branch for shipments of inventory at 20% above cost. The branch in turn prices inventory for sale purposes at 25% above billed price. On January 10, 2016, the entire branch inventory is destroyed by fire. No insurance was maintained. Branch account shows the following information:
Beginning inventory (at billed price) P26,400
Shipments from home office (Jan 1 - 10) 20,000
Sales 15,000
Sales returns 2,000
Sales allowances 1,000
Required - What is the cost of inventory destroyed by fire?
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