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Advanced Accounting Part2 Dayag 2015 Chapter 12
Advanced Financial Accounting and Reporting Part II (Palawan State University)
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Chapter 12
Problem I
(a)Working Fund – Agency ………………………………
………………………..
Cash ………………………………………………………………………….
(b)Accounts Receivable ………………………………….....................................
Sales-Agency ……………………………………………………………….
5,000
5,000
50,000
50,000
(c)Cash ……………………………………………………….....................................
Accounts Receivable ……………………………………………………..
35,000
35,000
(d)Expenses-Agency ………………………………………………………………..
Cash ………………………………………………………………………….
4,500
(e)Expenses-Agency ………………………………………………………………..
Cash ………………………………………………………………………….
2,250
4,500
2,250
(f) Cost of Goods Sold-Agency …………………………………………………… 36,000
Merchandise Inventory - Agency ……………………………………….
36,000
2.
Sales……………………………………………………………………………….P 50,000
Less: CGS………………………………………………………………………… 36,000
GP………………………………………………………………………………….P 14,000
Less: Expenses (P4,500 + P2,250)……………………………………………..
6,750
Net income – agency………………………………………………………….P 7,250
Problem II
(a) Branch Books:
(a) Cash …………………………………………………………..
Home Office ……………………………………………
42,500
(b) Shipments from Home Office ……………………………
Home Office …………………………………………...
50,200
(c) Accounts Receivable …………………………………….
Sales ……………………………………………………..
60,000
(d) Purchases ……………………………………………………
Accounts Payable ……………………………………
22,500
(e) Home Office ………………………………………………..
Accounts Receivable …………………………..
53,400
(f) Accounts Payable ………………………………………...
Cash ……………………………………………………..
12,250
(g) Furniture & Fixtures …………………………………………
Cash ……………………………………………………..
(h) Expenses ……………………………………………………..
Cash ……………………………………………………..
42,500
50,200
60,000
22,500
53,400
12,250
8,000
8,000
18,000
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18,000
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(b) Home Office Books:
(a) Branch ……………………………………………………….
Cash …………………………………………………….
42,500
(b) Branch ………………………………………………………
Shipments to Branch ………………………………..
50,200
(c) Accounts Receivable …………………………………...
Sales ……………………………………………………
105,000
(d) Purchases ………………………………………………….
Accounts Payable ………………………………….
122,500
(e) Cash ………………………………………………………..
Accounts Receivable ………………………………
113,600
(f) Accounts Payable ……………………………………….
Cash ……………………………………………………
124,000
42,500
50,200
105,000
122,500
113,600
124,000
(g) Expenses ……………………………………………………
Cash ……………………………………………………
26,600
(h) Cash ………………………………………………………..
Branch ………………………………………………...
53,400
(i) Retained Earnings ……………………………………….
Cash …………………………………………………...
10,000
26,600
53,400
10,000
BARTON CO.
Balance Sheet for Branch
December 31, 20x4
Assets
Liabilities
Cash ……………………………
10,250
Accounts Receivable ………
300
Merchandise Inv……………...
37,900
Prepaid Expenses ……………
Furnitures & Fixtures ….
P 8,000
Less accum. Depr ……
650
Total Assets ……………………
………………….P48,450
P 4,250
Accounts Payable ………… P
12,600
Accrued Expenses ……………
23,500
Home Office …………………..
750
7,350
P48,450
Total Liabilities
BARTON CO.
Income Statement for Branch
For Year Ended December 31, 19X6
Sales ……………………………………………………………………………
P66,000
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Cost of Goods Sold:
Purchases ……………………………………………………………
Shipments for home office ……………………………………….
Merchandise available for sale …………………………………
Less merchandise inv, December 31 …………………………..
Cost of Goods Sold ………………………………………………..
Gross Profit …………………………………………………………………….
Expenses ………………………………………………………………………
Net loss ………………………………………………………………………...
BARTON CO.
Income Statement for Branch
For Year Ended December 31, 20x4
Assets
P22,500
50,200
P72,700
23,500
49,200
P16,800
18,200
P 1,400
Liabilities & Stockholders’ Equity
Cash ……………………………..
P 23,200
Liabilities
Accounts Receivable ………..
19,050
Accounts payable ………… P 21,300
Merchandise Inventory………
48,500
Accrued Expenses ………….
1,350
P22,650
Prepaid Expenses …………….
2,050
Stockholders Equity
Furniture & Fixtures ….
P 20,000
Capital stock, P20 par……… P50,000
Less accum. Depr…..
5,580
14,420
Retained Earnings …………. 72,740
122,470
Branch …………………………
37,900
Total liabilities and stockholders’
Total Assets …………………...
P145,120
equity …………………
P145,120
BARTON CO.
Income Statement for Home Office
For Year Ended December 31, 20x4
Sales …………………………………………………………………………….......
Cost of goods sold:
Merchandise inventory, January 1 ………………………………….
Purchases ………………………………………………………………...
Merchandise available for sale ………………………………………
Less shipments to branch ……………………………………………...
Merchandise available for own sale ………………………………..
Less merchandise inventory, December 31 ……………………….
Cost of Goods Sold …………………………………………………….
Gross Profit …………………………………………………………………………
Expenses ……………………………………………………………………………
Net income from own operations ……………………………………………..
Deduct branch net loss ………………………………………………………….
Total Income ……………………………………………………………………….
P105,000
P 40,120
122,500
P162,620
50,200
P112,420
48,500
63,920
P 41,080
27,630
P 13,450
1,400
P 12,050
BARTON CO.
Income Statement for Home Office
For Year Ended December 31, 20x4
Sales ………………………………………………………………………………….
Cost of goods sold:
Merchandise inventory, January 1 …………………………………..
Purchases …………………………………………………………………
Merchandise available for sale ………………………………………
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P171,000
P 40,120
145,000
P185,120
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Less merchandise inventory, December 31 ………………………..
Cost of goods sold ……………………………………………………….
Gross profit …………………………………………………………………………..
Expenses ……………………………………………………………………………..
Net Income ………………………………………………………………………….
72,000
113,120
P 57,880
45,830
P 12,050
(a) Branch Books:
Expenses ……………………………………………………………….
Accumulated Depreciation – F&F……………………….
Sales ……………………………………………………………………
Merchandise Inventory …………………………………………….
Income summary …………………………………………..
650
650
66,000
23,500
89,500
Income Summary ……………………………………………………
Shipments from Home Office ……………………………
50,200
Purchases ……………………………………………………
22,500
Expenses ……………………………………………………..
90,900
18,200
Home Office …………………………………………………………
Income Summary …………………………………………
1,400
1,400
(b) Home Office Books
Expenses ……………………………………………………………….
Accumulated Depreciation – F&F……………………….
1,180
1,180
Sales ……………………………………………………………………
Merchandise Inventory …………………………………………….
Shipments to Branch ………………………………………………..
Income summary …………………………………………..
105,000
48,500
50,200
203,700
Income Summary ……………………………………………………
Merchandise Inventory ……………………………………
Purchases …………………………………………………….
Expenses ……………………………………………………..
190,250
Branch Income ………………………………………………………
Branch ……………………………………………………….
1,400
40,120
122,500
27,630
1,400
Income Summary …………………………………………………..
Branch Income ……………………………………………
1,400
Income Summary …………………………………………………..
Retained Earnings ………………………………………..
12,050
1,400
12,050
Problem III
Journal and Adjusting Entries – Home Office and Branch
Home Office Books
INTERCOMPANY
1/1 a
Branch Current . . . . . .
.
1,500
1,500
/
Branch Books
INTER-OFFICE Transactions
Cash . . . . . . . . . . . . . . . . . . .
...
Home Office Current. . . . .
.
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1,500
1,500
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Cash . . . . . . . . . . . . . . .
b
c
d.
Shipment to branch,
cost
Branch
Current . . . . . .
10,20
0
SFF - Branch
Store Furniture & Fixt
3,000
10,20
0
Acc. Depreciation – SFF
Acc. Deprec. SFF –
Br.
P3,000 x 10% x 2.5
yrs
750
SFF –
Branch . . . . . . . . . .
Branch
Current . . . . . .
900
Branch Current . . . . . .
.
3,000
No entry – eqpt accounts
maintained in the HO
books
750
No entry – eqpt accounts
maintained in the HO
books
900
2,600
Accounts Receivable
Home Office Current . . . . . . .
.
Shipments from Home
Office
10,200
10,20
0
Home Office Current . . . . . . .
.
Cash . . . . . . . . . . . . . . . . .
..
Accounts Receivable - HO
2,600
900
900
2,600
Home Office Current. . . . .
2,600
.
1/1 – 1/31
Transaction with Outsiders
Accounts Receivable . . .
34,60
0
34,60
0
Sales.. . . . . . . . . . . . . . .
Cash. . . . . . . . . . . . . . .
...
Accounts Receivable
40,00
0
Purchases . . . . . . . . . . .
.
Accounts Payable . .
31,60
0
Accounts Payable . . . . .
36,20
0
Cash. . . . . . . . . . . . .
1/1 – 1/31
6,200
Sales.. . . . . . . . . . . . . . .
6,200
2,600
40,00
0
Cash . . . . . . . . . . . . . . . . . . .
...
Accounts
Receivable . . . . .
3,000
31,60
0
Purchases. . . . . . . . . . . . . . .
...
Accounts
Payable. . . . . . . .
Accounts Payable . .. . . . . . . .
1,450
36.20
0
..
Accrued
expenses . . . . .
Expenses. . . . . . . . . . . .
. .
Cash. . . . . . . . . . . . .
..
Accounts Receivable . . .
250
3,000
Cash. . . . . . . . . . . . . . .
Expenses . .. . . . . . . . . . . . . .
..
Cash. . . . . . . . . . . . . . .. . .
..
8,950
2,600
1,450
1,250
1,250
9,200
Intercompany / INTER-OFFICE Transactions
Allowance for D/A. . . . .
150
Branch
Current . . . . . .
150
Shipment to branch
,cost
Branch
Current . . . . . .
1,250
Cash. . . . . . . . . . . . . . .
. .
1,000
1,250
Cash . . . . . . . . . . . . . . . . . . .
...
Accts. Rec. –
HO…………….
1,600
Home Office Current . . . . . . .
.
Accts. Rec. –
HO…………….
150
Home Office Current . . . . . . .
.
Shipments from Home
Office
1,250
Home Office Current . . . . . . .
.
1,000
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1,600
150
1,250
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Branch
Current . . . . . .
1,000
1,000
Cash. . . . . . . . . . . . . . . . . . .
Adjusting Entries
a.
b.
Shipment to branch,
cost
Branch
Current . . . . . .
600
Branch Current . . . . . .
..
475
600
475
Expenses. . . . . . . . . . .
c.
600
Expenses. . . . . . . . . . . . . . .
....
Home Office Current . . . . .
.
475
600
475
Branch Current.. . . . . .
35
Expenses. . . . . . . . . . . . . . .
35
..
....
Acc. Deprec. SFF –
35
Home Office Current . . . . .
35
Br.
.
P3,000/10 years x 1/12 = P25 (depreciation for one month; Asset life, 10 years); P900 / 7.5 years,
remaining life = P120 x 1/12= P10)
Expenses. . . . . . . . . . . .
100
..
Acc. Deprec. – SFF
[(P15,000 – P3,000)/10 x 1/12]
d.
e.
Home Office Current . . . . . . .
.
Shipments from Home
Office
Included in closing entries
Expenses. . . . . . . . . . . .
..
Accrued
expenses. . .
100
750
Expenses. . . . . . . . . . . . . .
750
350
Accrued expenses. . .
350
Closing Entries
Sales. . . . . . .. . . . . . . .
...
Merch. inventory,
ending
Shipments to branch
34,60
0
44,50
0
12,05
0
Merch. Inv. ,
beg…….
Sales. . . . . . .. . . . . . . . . . .
Merch. inventory, ending
(P9,800 + P600)
46,00
0
31,60
0
Purchases. . . . . . . . . .
Expenses (9,200 –
250
- 475 + 100 +
750)…..
Income
Summary……
Income Summary. . . . . . .
10,400
560
Merch. Inv. , beg…….
0
Purchases. . . . . . . . . .
Branch Income
Summary
Branch
Current……….
560
Income
Summary………..
Branch Income Sum
560
9,325
Shipments from HO
4,225
(P10,200 + P1,250
+P600)
Expenses (1,250 + 475
+ 35 + 350)…………….
560
Income
Summary………..
Retained
Earnings…..
6,200
Home Office Current . . . . . . .
.
Income
Summary . . . . . . . .
560
3.665
3,665
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3,000
12,050
2,110
560
560
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EAGLE CO.
Balance Sheet for Branch
January 31, 20x4
Assets
Liabilities
Cash …………............................
Accounts Receivable …………..
Accts. Rec.-home office ……….
Merchandise Inventory …………
Merchandise in Transit ………….
Total assets …………………
P15,950
P 1,100
3,600
850
9,800
600
P15,950
Accounts Payable ………………. P 1,550
Accrued expenses ……………….
350
Home Office ……………………… 14,050
Total Liabilities …………………….
EAGLE CO.
Income Statement for Branch
For Month Ended January 31, 20x4
Sales ………………………………………………………………………………………….
P 6,200
Cost of Goods Sold:
Merchandise inventory, beginning………………………………..P
0
Add: Purchases ……………………………………………………….
3,000
Shipments from home office (P11,450 +P600, in-transit)
12,050
Merchandise Available for Sale ………………………..
P 15,050
Less: Merchandise inv. Dec 31, 19x4 (P9,800 + P600)….
10,400
Cost of Goods Sold …………………………………………………………….
4,650
Gross Profit …………………………………………………………………………………
P 1,550
Expenses ……………………………………………………………………………………
2,110
Net Loss, from own operations…………………………………………………………
P 560
EAGLE CO.
Balance Sheet for Home Office
January 31, 20x4
Assets
Cash ……………………………………………………………………
Accounts Receivable ……………………………………………… P34,000
Less allowance for doubtful accounts ………………..
1,050
Merchandise Inventory …………………………………………….
Store furniture and fixtures …………………………………………
P12,000
Less accumulated depreciation ……………………….
3,950
Store furniture and fixtures-branch ………………………………
P 3,900
Less accumulated depreciation ………………………
785
Branch office ………………………………………………………...
Total Assets ……………………………………………………………
P 9,100
32,950
44,500
8,050
3,315
14,050
P111,765
Liabilities
Accounts Payable …………………………………………….. P29,150
Accrued Expenses ……………………………………………..
750
Total Liabilities …………………………………………………..
Stockholders’ Equity
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P29,900
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Capital Stock ……………………………………………………P50,000
Retained earnings …………………………………………….. 31,865
Total stockholder’s equity ……………………………………
Total liabilities and stockholders’ equity ……………………
81,865
P111,765
EAGLE CO.
Income Statement for Home Office
For Month Ended January 31, 20x4
Sales ………………………………………………………………………………
P 34,600
Cost of goods sold:
Merchandise inventory, January 1 ……………………..
P46,000
Purchases ……………………………………………………
31,600
Merchandise available for sale …………………………
77,600
Less shipments to branch …………………………………
12,050
Merchandise available for own sales ………………….
P65,550
Less merchandise inventory, January 31 ………………
44,500
Cost of goods sold ……………………………………………………………
21,050
Gross Profit …………………………………………………………………………
P 13,650
Expenses ……………………………………………………………………………
9,325
Net income from own operations …………………………………………….
P 4,225
Deduct branch net loss …………………………………………………………
560
Total Income ……………………………………………………………………
P 3,665
EAGLE CO.
Income Statement for Home Office
For Month Ended January 31, 20x4
Assets
Liabilities’ and Stockholders’ Equity
Liabilities
Cash ……………………………..
………. P 10,200
Accounts Payable …… P30,700
Accounts receivable ……….. P38,450
Accrued Expenses ……
1,100
P
31,800
Less allow for doubtFul accounts ………..
1,050
37,400
Merchandise Inventory ………………..
54,900
Stockholders Equity
Store furn. & fixtures ………… P15,900
Capital Stocks …………P50,000
Less accum depr
4,735
11,165
Retained earnings …… 31,865
81,865
Total assets ……………………………… P113,665
Total liab. And stockholders’ equity .
P113,665
EAGLE CO.
Combined Income Statement for Home Office and Branch
For Month Ended January 31, 20x4
Sales …………………………………………………………………………………..
Cost of goods sold:
Merchandise Inventory, January 1 ……………….
P46,000
Purchases ……………………………………………...
34,600
Merchandise available for sale …………………...
P80,600
Less merchandise inventory, Jan 31 ……………...
54,900
Cost of goods sold …………………………………...............................
Gross profit …………………………………………………………………………...
Expenses ………………………………………………………………………………
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P 40,800
25,700
P 15,100
11,435
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Net Income …………………………………………………………………………..
EAGLE CO.
Combined Balance Sheet
January 31, 20x4
Assets
Cash ……………………………………………………………………
Accounts Receivable ………………………………………………
P38,450
Less: Allowance for doubtful accounts …………………………
1,050
Merchandise Inventory …………………………………………….
Store furniture and fixtures ………………………………………… P15,900
Less: Accumulated depreciation ………………………………..
4,735
Total Assets ……………………………………………………………
Liabilities
Accounts Payable ……………………………………………..
P30,700
Accrued Expenses ……………………………………………..
1,100
Total Liabilities …………………………………………………..
Stockholders’ Equity
Capital Stock ……………………………………………………
Retained earnings ……………………………………………..
Total stockholder’s equity ……………………………………
Total liabilities and stockholders’ equity ……………………
P 3,665
P 10,200
37,400
54,900
_ 11,165
P113,665
P 31,800
P50,000
31,865
81,865
P113,665
Problem IV
1.
Socrates Company
Home Office and Plato Branch
Reconciliation of Reciprocal Ledger Accounts
June 30, 20x4
Investment in
Plato Branch
Home Office
Ledger
Ledger
Account
Account
(Debit)
(Credit)
Balances prior to adjustment
P85,000
P33,500
Add: Merchandise shipped to branch
24,000
Less: Acquisition of office equipment by branch
(carried in accounting records of home office)
(14,500)
Collection of branch trade accounts receivable
(9,000)
Payment of cash by branch
(22,000)
_______
Adjusted balances
P48,500
P48,500
2.
(a)
Accounting records of home office:
Office Equipment: Plato Branch
14,500
Investment in Plato Branch
To record acquisition of office equipment by branch.
Cash in Transit
Investment in Plato Branch
To record cash in transit from branch.
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14,500
22,000
22,000
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(b)
Accounting records of branch:
Home Office
9,000
Trade Accounts Receivable
To record collection by home office of branch accounts
receivable.
Inventories in Transit
Home Office
To record shipment of merchandise in transit from
home office.
Problem V
((a)
Balances before Adjustments ………………………………………..
Adjustments:
Additions:
Merchandise in transit to branch ………………….
Collection of Home office receivable by Branch
Understatement of branch net income for Nov..
Deductions:
Merchandise return to home office in transit …………….
Corrected Balances ………………………………………………
24,000
24,000
BRANCH
ACCOUNT
P 8,400
HOME OFFICE
ACCOUNT…
P 9,735
615
2,500
90
P10,990
P10,350
640
P10,350
P10,350
(b) Branch Books:
Shipments from Home Office-in Transit …………………….
Home Office …………………………………………...
Home Office Books:
Branch ……………………………………………………………
Accounts Receivable ………………………………..
9,000
615
615
2,500
2,500
Branch ……………………………………………………………
Retained Earnings …………………………………….
90
90
Merchandise Returns from Branch – in Transit …………….
Branch …………………………………………………..
640
640
Problem VI
1.
Branch
Account
Balances before adjustments
Adjustments:
Additions:
Advertising charged to branch but not yet recorded
on branch books
Merchandise in transit to branch but not yet shown
on branch books
Collection of home office account by branch not yet
recorded by home office
P 77,150
Home
office
Account
P 56,450
600
4,400
____750
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_______
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P77,900
Deductions:
Overstatement of branch profit for 20x0 on home
office books
Cash in transit to home office but not yet shown on
home office books
Overstatement of charge for merchandise from
home office on branch books (home office shipped
200 units @ P37.85, or P7,570, and 200 units @
P44,95, or P8,990, a total of P16,560; branch
erroneously recorded shipment at P16,650, an
overstatement of P90
Corrected balances
540
16,000
_______
P 61360
2. Home office books:
Jan. 31
Retained Earnings
Wilshire Branch
31
31
Cash in Transit
Wilshire Branch
31
___90
P 61,360
540
540
16,000
16,000
Wilshire Branch
Accounts Receivable
750
750
Branch Books:
Jan. 31
Advertising Expense
Home Office
31
P61,450
600
600
Shipments from Home Office – In Transit
Home Office
4,400
4,400
Home Office
Shipments from Home Office
90
90
Problem VII
1.
Branch
Account
Balances before adjustments
Adjustments:
Additions:
Corrected branch income for January (P1,440 –
P215)
Understatement of branch paid by home office for
December
Expenses of branch paid by home office
P 59,365
Home
Office
Account
P 57,525
1,225
310
_______
P 60,900
Deductions:
Collection by home office of branch receivable
Correction of branch income for January
Merchandise transferred to Brentwood branch but
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____215
P 57,740
65
215
lOMoARcPSD|8683858
incorrectly charged by Beverly Hills branch
Merchandise returns to home office in transit
Uncollectible accounts of branch
Corrected Balances
1,400
840
__1,200
P 57,460
_______
P 57,460
2. (a) Entries to bring branch books up to date:
Correction in Income of Prior Periods
Home Office
215
Home Office
Income Summary
215
215
215
Home Office
Accounts Receivable
65
65
(b) Entries to bring home office books up to date:
Beverly Hills Branch
Beverly Hills Branch Income
Beverly Hills Branch
Retained Earnings
1,225
1,225
310
310
Shipments to Beverly Hills Branch
Beverly Hills Branch
1,400
Brentwood Branch
Shipments to Brentwood Branch
1,400
1,400
Merchandise Returns from Branch – In Transit – Beverly
Hills Branch
Beverly Hills Branch
1,400
840
Allowance for Doubtful Accounts – Beverly Hills Branch
1,200
Beverly Hills Branch
Problem VIII
1.
Home Office
(b) Mdse. allowance by home
(a) Charge for office furniture
office
350.00
by home office
(f) Truck repairs charged by
(d) Charge for labor by home
home office
293.00
office
(e) Charge for freight by
home office
(h) Proceeds from sale of
truck
643.00
Net credit Total
1,556.5
0
1,229.5
0
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840
1,200
780.00
866.00
78.50
475.00
2,199.5
0
_______
2,199.5
0
lOMoARcPSD|8683858
(a) Purchase of office furniture
for branch
(c) Branch charge for interest
(d) Branch charge for labor
(e) Branch charge for freight
Branch
(b) Mdse. allowance for
870.00
branch
325.00 (g) Proceeds from sale of
truck
433.00
_785.0
0
2,413.0
0
_______ Net Debit Total
2,413.0
0
Balance in branch account per home office book, September 30, 20x2
Deduct net debit total per home office books for transactions that
involve discrepancies
Add net credit total per branch books for transaction that involve
discrepancies
Balance in home office account per branch books, September 30, 20x2
300.00
475.00
______
775.00
1,638,00
0
_2,413.0
0
P
131,690.00
1,638.00
P
130,052.00
__1,556.50
P
131,608.50
2.
Balance in home office account per branch books,
September 30, 20x2
Add:
P
131,608.50
(a) Failure by branch to take up full furniture
charges
(b) Recognition by branch of excess merchandise
allowance
(c) Failure by branch to recognize charge by
home office for interest
(e) Failure by branch to recognize full freight
charges
(f) Truck repairs charge to home office account in
error
P 90.00
Deduct: (d) Recognition by branch of excess labor
charges
(h) Credit entry to home office made in error
on sale of truck
Corrected interoffice balance, September 30, 20x2
433.00
50.00
325
706.50
293.00
__475.00
___1,464.50
P
133,073.00
___908.00
P
132,265.00
3.
Balance in branch account per home office books,
September 30, 20x2
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P
lOMoARcPSD|8683858
131,690.00
Add credit to branch account made in error for proceeds from sale
of truck
Corrected interoffice balance, September 30, 20x2
_____475.00
P
132,265.00
4.
Office Furniture
Merchandise allowances
Home office interest charges payable
Interest expense
Freight In
Repairs on truck
Labor
Trucks
Home Office
90.00
50.00
250.00
75.00
706.50
293.00
433.00
475.00
556.50
Multiple Choice Problem
1. d
Branch A
Assets:
Inventory, January 1
Imprest branch fund
Accounts receivable, January 1
Total Assets
Less: Liabilities
Home Office Current Account
P 21,000
2,000
55,000
P 78,000
-0P 78,000
Branch B
P 19,000
1,500
43,500
P 64,000
-0P 64,000
2. b
Branch A
Assets:
Inventory, December 31
Imprest branch fund
Accounts receivable, December 31
Total Assets
Less: Liabilities
Home Office Current Account
P 19,000
2,000
70,000
P 91,000
-0P 91,000
Branch B
P 12,000
1,500
53,500
P 67,000
-0P 67,000
3. d – incidentally, the entry in the books of the branch would be as follows:
Profit and loss summary ………………………………………………………… xxx
Home Office Current…………………………………………………….
Xxx
4. c
January 1,20x4
Assets:
Inventory
Petty cash fund
Accounts receivable
Total Assets
Less: Liabilities
Home Office Current Account
P 37,000
3,000
43,000
P 83,000
_____-0P 83,000
5. a – refer to No. 4 for computations
6. a
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January 1,
20x5
P 41,000
3,000
49,000
P 93,000
_____-0P 93,000
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Sales
Less: Cost of goods sold:
SFHO……………………………………………………………
Less: Inventory, ending………………………………………
Gross profit……………………………………………………………
Less: Expenses –
Net Loss………………………………………………………………..
P 74,000
P67,680
9,180
58,500
P 15,500
6,820
P
8,680
7. a
January 1, 20x6
Assets:
Cash
Inventory
Accounts receivable
Total Assets
Less: Liabilities
Home Office Current Account
P 4,200
9,180
12,800
P 26,180
_____-0P 26,180
8. a – nominal accounts have zero beginning balance.
9. d
Branch
Current
Unadjusted balance, 6/30/20x4
Add (Deduct): Adjustments
1 Erroneous recording of branch equipment
2. Insurance premium recorded twice
P 225,770
H. Office
Current
P 226,485*
(
3150
675)
3. Erroneous recording of freight
(
90)
4. Discount on merchandise
(
800)
5. Failure by the branch to record share in advertising
700
6. error by the home office to record remittance of
3,000
________
Cebu
Adjusted balance, 6/30/20x4
P 228,770
P 228,770
* The P226,485 is compute simply by working back with P228,770 adjusted balance as the starting
point.
10. c
Unadjusted balance
Add (deduct) adjustments:
In transit
Remittance
Returns
Cash in transit
Expenses - HO
Expenses – branch
Error
Adjusted balance
Home Office Books
(Branch CurrentDr. balance)
P518,575
Branch Books
(Home Office Current –
Cr. balance)
P452,276
10,500
( 17,000)
(
775)
25,000
(
800)
12,000
_____224
P 500,000
________
P 500,000
11. d
Home Office Books
(Branch CurrentDr. balance)
Branch Books
(Home Office Current –
Cr. balance)
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Unadjusted balance
Add (deduct) adjustments:
Excess freight
Cash in transit
Returns
Expenses – branch
Adjusted balance
P515,000
P495,750
(
750)
( 11,000)
( 4,000)
________
5,000
P 500,000
P 500,000
12.
13.
14.
15.
c – refer to No. 11 for computations
a – refer to No. 11 for computations
d – refer to No. 11 for computations
d - No entry should be made in the books of the home office, since the freight should be
chargeable to the branch and the payment of the freight was made by the branch.
16. a
Home Office Books
Branch Books
(Home Office Current –
(Branch CurrentDr. balance)
Cr. balance)
Unadjusted balance
P85,000
P33,500
Add (deduct) adjustments:
Collection of branch receiv
( 9,000)
Shipments in transit
24,000
Purchase by branch of office
equipment
( 14,500)
Remittance
( 22,000)
_________
Adjusted balance
P 48,500
P 48,500
17. b
Unadjusted balance
Add (deduct) adjustments:
Remittance
Returns
Error by the branch
Expenses – branch
Adjusted balance
Home Office Books
(Branch CurrentDr. balance)
P590,000
Branch Books
(Home Office Current –
Cr. balance)
P506,700
(40,000)
(15,000)
________
300
28,000
P 535,000
P 535,000
Home Office Books
(Branch CurrentDr. balance)
P150,000
Branch Books
(Home Office Current –
Cr. balance)
P117,420
18. c
Unadjusted balance
Add (deduct) adjustments:
In transit
HO A/R collected by br.
Supplies returned
Error in recording Br. NI
Cash sent to branch
to General Expense by HO
Adjusted balance
37,500
10,500
( 4,500)
( 1,080)
25,000
P 179,920
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25,000
P 179,920
lOMoARcPSD|8683858
19. d – refer to No. 18 for computation.
20. a
Unadjusted balance
Add (deduct) adjustments:
In transit
HO A/R collected by br.
Cash in transit
Error in recording Br. NI
Adjusted balance
Home Office Books
(Branch Current- Dr.
balance)
P40,000
Branch Books
(Home Office Current –
Cr. balance)
P31,100
5,800
500
2,000
( 3,600)
P38,900
2,000
_______
P38,900
Home Office Books
(Branch Current- Dr.
balance)
P49,600
Branch Books
(Home Office Current –
Cr. balance)
P44,00
21. a – refer to No. 20 for computations
22. a
Unadjusted balance
Add (deduct) adjustments:
Collection of branch A/R
In transit
Purchase of furniture
Return of excess merchandise
Remittance
Adjusted balance
(
( 1,200)
( 1,500)
(
500)
P46,400
800)
3,200
_______
P46,400
23. b – refer to No. 22 for computations
24. (C)
Sales (P350,000 + P100,000)………………………………………………………….P 450,000
Less: Cost of goods sold:
Purchases (P400,000 + P50,000)…………………………….
P 450,000
Less: Inventory, ending………………………………………
90,000
360,000
Gross profit……………………………………………………………
P 90,000
Less: Expenses –
Salaries and commission……………………………………..
P 70,000
Rent………………………………………………………………
20,000
Advertising supplies (P10,000 – P6,000)……………………
4,000
Other expenses……………………………………………….
5,000
99,000
Net Loss………………………………………………………………..
P ( 9,000)
25. a
In adopting the imprest system for the agency working fund, the home office writes a check to
the agency for the amount of the fund. Establishment of the fund is recorded on the home
office books by a debit to the Agency working fund and credit cash. The agency will request
fund replenishment whenever the fund runs low and at the end of each fiscal period. Such a
request is normally accomplished by an itemized and authenticated statement of
disbursements and the paid vouchers. Upon sending the agency a check in replenishment of
the fund, the home office debits expense or other accounts for which disbursements from the
fund were reported and credits cash.
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lOMoARcPSD|8683858
26. d
Normally, transactions of the agency are recorded in the books of the home office separately
identified with the appropriate agency.
Theories
1.
decentralized
2.
Home Office Current
3.
Branch Income
4.
Home Office
5.
intracompany
6.
True
7.
True
8.
False
9.
False
10
,
True
11
.
12
.
13
.
14
.
15
.
16
.
17
.
18
.
19
.
20
.
False
False
False
True
True
False
True
False
True
True
21
.
22
.
23
.
24
.
25
.
26
.
27
.
28
.
29
.
30
.
False
True
True
True
False
C
A
A
D
A
31
.
32
.
33
.
34
.
35
.
36
.
37
.
38
.
39
.
40
.
E
B
c
d
A
C
A
B
B
B
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41
.
42
.
43
.
44
.
45
.
46
.
47
.
48
.
49
.
50
.
51
.
52
.
A
C
B
D
D
C
B
B
C
C
C
D