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The home Office bills its only branch at 25% above cost for all merchandise shipped to the branch. Both the home office and the branch use the periodic inventory system. During 2018, the home office shipped merchandise to the branch at a billed price of P30,000. The branch purchased merchandise on account amounting to P20,000. Branch inventories as at December 31 amounted to P28,170 of which P8,670 were from purchases made. Home Office book showed an allowance account of P9,000 as of December 31 before adjustments. Assume that inventories of the branch as at January1, 2018 included P5,500 were from outsider and that branch sales amounted to P68,000.
Problem 1: What would be the HO adjusted balance of the allowance account as at December 31, 2018?
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