On June 30, 2006, the Unadjusted Credit Balance of the Allowance

Essay

On June 30, 2006, the unadjusted credit balance of the Allowance for Overvaluation of Inventories: Cyprus Branch ledger account in the accounting records of the home office of Wilmington Company was $60,000. The home office of Wilmington ships merchandise to the branch at a markup of 20% on home office cost. For the fiscal year ended June 30, 2006, the branch had reported a net loss (based on billed prices of merchandise shipped from home office) of $18,400 and ending inventories (all received from home office) of $132,000 at billed prices.
Prepare journal entries for the home office of Wilmington Company on June 30, 2006, to record the foregoing information.