HOBA COMPUTATION- MEDIUM THEORY The TokTik home office ships merchandise to its Makati Branch at 20 percent above cost. Makati branch’s book shows a beginning inventory of P135,000 (50% from outside purchase) and shipments from home office of P405,000. The ending inventory of the Makati branch amounted to P337,500 in which 60% is home office merchandise while the remaining balances is from outside purchases. The Makati branch purchased merchandise costing P317,500. The total sales and operating costs of the branch for the year amounted to P1,040,000 and P220,000 respectively. What is the entry of the home office upon shipment of merchandise to the branch? Transactions between a home office and its branch are accounted for in reciprocal accounts. The reciprocal account maintained in the branch books is called Investment in branch. Home office Purchases from home office. Any of these. The branch records a debit memo received from the home as Debit to home office account. Debit to allocated expense. Debit to investment account. Credit to home office account. Correct answer Credit to home office account. The freight on shipments to the branch paid by the home office is recorded by the home office as Debit to freight-in Credit to freight-in. Credit to investment account. Credit to cash. The depreciation expense on equipment carried in the books of the home office but used by the branch is recorded in the branch's books as Debit to investment in branch and credit to accumulated depreciation Debit to depreciation expense and credit to investment in branch Debit to depreciation expense and credit to home office account. Not recorded Transactions between branches are recorded as if each of them is transacting with the home office. by debiting or crediting their own inter-branch accounts. a and b not accounted for by the branches Debit Branch Current 405,000, Credit Shipment to branch 405,000 Debit Investment in branch 405,000, Credit Shipment to branch 337,500 and Allowance for overvaluation 67,500 Debit Shipments from home office 405,000, Credit Home office current account 405,000 None of the above The TokTik home office ships merchandise to its Makati Branch at 20 percent above cost. Makati branch’s book shows a beginning inventory of P135,000 (50% from outside purchase) and shipments from home office of P405,000. The ending inventory of the Makati branch amounted to P337,500 in which 60% is home office merchandise while the remaining balances is from outside purchases. The Makati branch purchased merchandise costing P317,500. The total sales and operating costs of the branch for the year amounted to P1,040,000 and P220,000 respectively. What is the pre closing balance of the Allowance for Overvaluation of Branch Inventory Account? P33,750 P40,500 P78,750 P94,500 The TokTik home office ships merchandise to its Makati Branch at 20 percent above cost. Makati branch’s book shows a beginning inventory of P135,000 (50% from outside purchase) and shipments from home office of P405,000. The ending inventory of the Makati branch amounted to P337,500 in which 60% is home office merchandise while the remaining balances is from outside purchases. The Makati branch purchased merchandise costing P317,500. The total sales and operating costs of the branch for the year amounted to P1,040,000 and P220,000 respectively. What is the post closing balance in the Unrealized Profit in Branch Inventory Account? P33,750 P40,500 P78,750 P94,500 The TokTik home office ships merchandise to its Makati Branch at 20 percent above cost. Makati branch’s book shows a beginning inventory of P135,000 (50% from outside purchase) and shipments from home office of P405,000. The ending inventory of the Makati branch amounted to P337,500 in which 60% is home office merchandise while the remaining balances is from outside purchases. The Makati branch purchased merchandise costing P317,500. The total sales and operating costs of the branch for the year amounted to P1,040,000 and P220,000 respectively. What is the amount of overvaluation of Cost of Goods Sold or undervaluation in income? P33,750 P45,000 P78,750 P94,500 The TokTik home office ships merchandise to its Makati Branch at 20 percent above cost. Makati branch’s book shows a beginning inventory of P135,000 (50% from outside purchase) and shipments from home office of P405,000. The ending inventory of the Makati branch amounted to P337,500 in which 60% is home office merchandise while the remaining balances is from outside purchases. The Makati branch purchased merchandise costing P317,500. The total sales and operating costs of the branch for the year amounted to P1,040,000 and P220,000 respectively. The Allowance For Overvaluation of Branch Inventory Account is adjusted to how much? P33,750 P45,000 P78,750 P94,500 COMPUTATION – HARD The TokTik home office ships merchandise to its Makati Branch at 20 percent above cost. Makati branch’s book shows a beginning inventory of P135,000 (50% from outside purchase) and shipments from home office of P405,000. The ending inventory of the Makati branch amounted to P337,500 in which 60% is home office merchandise while the remaining balances is from outside purchases. The Makati branch purchased merchandise costing P317,500. The total sales and operating costs of the branch for the year amounted to P1,040,000 and P220,000 respectively. The Allowance For Overvaluation of Branch Inventory Account is adjusted by how much? P33,750 P40,500 P45,000 P94,500 The TokTik home office ships merchandise to its Makati Branch at 20 percent above cost. Makati branch’s book shows a beginning inventory of P135,000 (50% from outside purchase) and shipments from home office of P405,000. The ending inventory of the Makati branch amounted to P337,500 in which 60% is home office merchandise while the remaining balances is from outside purchases. The Makati branch purchased merchandise costing P317,500. The total sales and operating costs of the branch for the year amounted to P1,040,000 and P220,000 respectively. What is the overvaluation of Branch Ending Inventory? P33,750 P40,500 P45,000 P94,500 The TokTik home office ships merchandise to its Makati Branch at 20 percent above cost. Makati branch’s book shows a beginning inventory of P135,000 (50% from outside purchase) and shipments from home office of P405,000. The ending inventory of the Makati branch amounted to P337,500 in which 60% is home office merchandise while the remaining balances is from outside purchases. The Makati branch purchased merchandise costing P317,500. The total sales and operating costs of the branch for the year amounted to P1,040,000 and P220,000 respectively. How much is the true ending inventory of the branch? P280,250 P303,750 P315,000 P337,500 The TokTik home office ships merchandise to its Makati Branch at 20 percent above cost. Makati branch’s book shows a beginning inventory of P135,000 (50% from outside purchase) and shipments from home office of P405,000. The ending inventory of the Makati branch amounted to P337,500 in which 60% is home office merchandise while the remaining balances is from outside purchases. The Makati branch purchased merchandise costing P317,500. The total sales and operating costs of the branch for the year amounted to P1,040,000 and P220,000 respectively. How much is the total Cost of goods sold of the branch? P225,000 P270,000 P475,000 P520,000 The TokTik home office ships merchandise to its Makati Branch at 20 percent above cost. Makati branch’s book shows a beginning inventory of P135,000 (50% from outside purchase) and shipments from home office of P405,000. The ending inventory of the Makati branch amounted to P337,500 in which 60% is home office merchandise while the remaining balances is from outside purchases. The Makati branch purchased merchandise costing P317,500. The total sales and operating costs of the branch for the year amounted to P1,040,000 and P220,000 respectively. How much is the true net income of the branch? P225,000 P270,000 P300,000 P345,000 EVALUATION ACTIVITY The ABC home office ships merchandise to its Makati Branch at 20 percent above cost. Makati branch’s book shows a beginning inventory of P135,000 (50% from outside purchase) and shipments from home office of P405,000. The ending inventory of the Makati branch amounted to P337,500 in which 60% is home office merchandise while the remaining balances is from outside purchases. The Makati branch purchased merchandise costing P317,500. The total sales and operating costs of the branch for the year amounted to P1,040,000 and P220,000 respectively. What is the preclosing balance of the Allowance for Overvaluation of Branch Inventory Account? P33,750 P40,500 P94,500" P78,750 The ABC home office ships merchandise to its Makati Branch at 20 percent above cost. Makati branch’s book shows a beginning inventory of P135,000 (50% from outside purchase) and shipments from home office of P405,000. The ending inventory of the Makati branch amounted to P337,500 in which 60% is home office merchandise while the remaining balances is from outside purchases. The Makati branch purchased merchandise costing P317,500. The total sales and operating costs of the branch for the year amounted to P1,040,000 and P220,000 respectively. What is the post-closing balance in the Unrealized Profit in Branch Inventory Account? P40,500 P78,750 P94,500" P33,750 The following are the advantages of home office and branch accounting except: It helps to ascertain the profit & loss of each branch. It helps to know each branch’s debtors inventory and cash position. It helps to determine each branch’s wages, rent, salary, and expenses separately. It increases the company’s expenses because of a different setup at each location. The following are the disadvantages of home office and branch accounting except: Due to a separate account for each branch, it requires more workforce. It requires an individual branch manager for each branch. Separate accounting of each chapter helps to make decisions according to branch requirements. It requires other infrastructure at each location or unit. The TokTik home office ships merchandise to its Makati Branch at 20 percent above cost. Makati branch’s book shows a beginning inventory of P135,000 (50% from outside purchase) and shipments from home office of P405,000. The ending inventory of the Makati branch amounted to P337,500 in which 60% is home office merchandise while the remaining balances is from outside purchases. The Makati branch purchased merchandise costing P317,500. The total sales and operating costs of the branch for the year amounted to P1,040,000 and P220,000 respectively. What is the amount of overvaluation of Cost of Goods Sold or undervaluation in income? P33,750 P45,000 P78,750 P94,500" The TokTik home office ships merchandise to its Makati Branch at 20 percent above cost. Makati branch’s book shows a beginning inventory of P135,000 (50% from outside purchase) and shipments from home office of P405,000. The ending inventory of the Makati branch amounted to P337,500 in which 60% is home office merchandise while the remaining balances is from outside purchases. The Makati branch purchased merchandise costing P317,500. The total sales and operating costs of the branch for the year amounted to P1,040,000 and P220,000 respectively. The Allowance For Overvaluation of Branch Inventory Account is adjusted to how much? P33,750 P45,000 P78,750 P94,500" The home office of ABC Company bills merchandise to branches at 25% above home office cost. Information taken from the accounting records of XYZ Branch is as follows: Beginning inventories (at billed prices)-P17,000; Shipments from home office (at billed prices)-P42,500; Ending inventories (at billed prices)-P20,000; Net loss for accounting period-P1,500.The net income or net loss of XYZ Branch, based on home office cost of branch merchandise, is: P7,900 net income P9,400 net loss P7,000 net income P6,400 net income On November 2, 2015, ABC Company created an agency in Davao, and transferred merchandise samples costing P15,000, equipment worth P36,000 and a cash working fund of P10,000 to be maintained on an imprest basis. The agency transmitted to the home office sales orders which were billed at P90,000 of which P46,550 was collected net of a 2% discount. The agency also paid for its operating expenses of P7,500 including supplies of P2,000. The agency received replenishment thereof from the home office before the year ended. On December 31, the agency samples were estimated to be useful over a period of 5 months while the equipment is estimated to have a useful life of eight years. Unused supplies on Dec 31 amounted to P1,000. Home office maintains a gross profit rate of 25% of cost. Give the cost of sales of Home Office if its Inventory on Nov 2 is P1,250,000 while on hand at Dec 31 went down to 20% of total stock . Net purchases was P2,750,000 including freight of P50,000. P3,000,000 P3,131,000 P3,010,300 P3,113,000 The depreciation expense on equipment carried in the books of the home office but used by the branch is recorded in the branch's books as Debit to investment in branch and credit to accumulated depreciation Debit to depreciation expense and credit to investment in branch Debit to depreciation expense and credit to home office account. Not recorded Transactions between branches are recorded by the transacting branches as if each of them is transacting with the home office. by debiting or crediting their own inter-branch accounts. a and b not accounted for by the branches