CHAPTER 12 MULTIPLE CHOICES - COMPUTATIONAL
12-1:
d. This is recorded when the working fund is replenished.
12-2:
c. Sales Cost of goods sold: Purchases Merchandise inventory, end Gross profit Expenses Net income (loss)
12-3:
P800,000 180,000
620,000 P 80,000 198,000 P (118,000)
b Sales Cost of goods sold (P70,000 / 140%) Gross profit Less: Samples (P8,000 – P6,000) Expenses Net income
12-4:
P 700,000
P 70,000 50,000 P 20,000 P 2,000 2,800
4,800 P 15,200
a Sales Cost of goods sold Gross profit Expenses (P9,000 + P4,500) Net income
12-5:
a
12-6:
a
12-7:
c
12-8
a Shipment of merchandise to home office Equipment sent to home office Expenses assigned to branch by the home office Cash remittance to home office Home office account balance
P 100,000 72,000 P 28,000 13,500 P 14,500
P 80,000 50,000 8,000 (40,000) P 98,000
1
12-9: d 12-10: a Home Office account balance before closing, Dec. 32, 1008 P 35,000 Net income (loss) Sales P147,000 Cost of cost goods sold Shipment to branch P135,000 Inventory, 12/31 18,500 116,500 Gross profit P 30,500 Expenses 13,500 17,000 Home Office account balance (Investment in Branch account balance) P 52,000 Shipment to Branch account has no beginning balance, because this was closed at the end of 2011. 12-11: b Jan. 1, 2011 P 6,000 86,000 74,000 P166,000
Petty cash fund Accounts receivable Inventory Home Office account balance
Jan. 1, 2012 P 6,000 98,000 82,000 P186,000
12-12: d
Unadjusted balances, Dec. 31 Remittance in transit Shipment in transit Cash collections of home office Adjusted balances, Dec. 31
(Branch Books) Home Office P 21,320 7,280 400) P 28,200
(Home Office Books) Investment in Branch P 38,600 (10,400)
(
P 28,200
12-13: a Unadjusted balance – Investment in Branch account, 12/31 Charge for advances by president Erroneous entry for merchandise allowance Share in advertising expense Unadjusted balance – Home Office account, 12/31
P430,000 (5,500) ( 600) (9,000) P414,900
2
12-14: a
Unadjusted balances, 12/31 Shipment in transit Collection of HO A/R by branch Error in recording of branch profit Returns of merchandise in transit Adjusted balances, 12/31
(Branch Books) Home Office P 97,350 6,150
P103,500
(Home Office Books) Investment in Branch P 84,000 25,000 900 ( 6,400) P103,500
12-15: a (Branch Books) Home Office P27,350
Unadjusted balances Error in recording shipment to Cavity branch Error in recording shipment to Tagaytay branch Branch AR collected by home office (3,600) Merchandise returns in transit Error in recording branch profit Adjusted balances P23,750 12-16: c Unadjusted balance- Investment in Branch account Remittance in transit Shipment in transit Expenses allocated Error in recording remittance Error in recording shipments Unadjusted balance – Home Office account
Unadjusted balances, Remittance in transit Shipment in transit Expenses allocated Unrecorded HO collection of AR Error in recording shipments Adjusted balances
( Branch Books) Home Office P 44,000 20,000 5,000 (3,000) 9,000 P 75,000
(Home Office Books) Investment in Branch P25,550 (12,000) 15,000 ( 1,200) ( 3,600) P23,750
P 85,000 (10,000) (20,000) ( 5,000) 3,000 ( 9,000) P 44,000 (HomeOffice Books) Investment in Branch P 85,000 (10,000)
P 75,000
12-17 a
Unadjusted balances Branch AR collected by Home Office Shipments in transit Acquisition of furniture Merchandise returns Cash remittance in transit Adjusted balances
(Branch Books) Home Office P 440,000 ( 8,000) 32,000
P 464,000
(Home Office Books) Investment in Branch P 496,000
(12,000) (15,000) ( 5,000) P 464,000
3
PROBLEMS Problem 12-1 Home Office Books 1. Investment in branch Cash
30,000
2. Investment in branch Shipment to branch
75,000
Branch Books Cash 30,000
75,000
3. No entry
4. No entry
5. Shipment to branch Investment in branch
30,000 Home office
Shipment from home office Home office
75,000
Purchases Accounts payable
10,000
Accounts receivable Sales 2,000 2,000
6. No entry
30,000
75,000
10,000 125,000 125,000
Home office 2,000 Shipment from home office Cash
105,000 Accounts receivable
7. No entry
8. No entry
9. Investment in branch Accumulated dep’n
10. Cash Investment in branch 11. Cash
7,500 7,500
65,000 65,000 3,000
Investment in branch 12. Investment in branch Branch income
3,000 10,000 10,000
2,000
105,000
Accounts payable Cash
7,000
Salaries Rent Utilities Other operating expenses Cash
10,000 5,000 2,000 12,500
Depreciation Rent Insurance Home office Home office Cash Home office Accounts receivable
7,000
29,500 1,500 5,000 1,000 7,500 65,000 65,000 3,000
Sales 125,000 Inventory, end 5,000 Shipment from HO Purchases Salaries Rent Utilities Other operating expenses Home office
3,000
73,000 10,000 10,000 10,000 2,000 12,500 10,000
4
Problem 12-2 a.
Books of the Branch 1.
2.
3.
Cash Merchandise inventory Home office
200,000 350,000
Merchandise inventory Accounts payable
400,000
Accounts receivable Sales
650,000
Cost of goods sold Merchandise inventory
425,000
Cash
600,000
550,000
400,000
650,000
425,000
Accounts receivable 4.
5.
b.
Advertising expense Sales commission Other expense Cash
40,000 65,000 45,000 150,000
Accounts payable Home office Cash
370,000 120,000 490,000
Manila Sales – Naga Branch Income Statement Year Ended December 31, 2011 Sales Cost of goods sold Gross profit Expenses: Advertising expense Sales commissions Other expenses Net income
c.
600,000
P650,000 425,000 225,000 P40,000 65,000 45,000
150,000 P 75,000
Manila Sales – Naga Branch Statement of Financial Position December 31, 2011 Cash Accounts receivable Merchandise inventory Total assets
P160,000 50,000 325,000 P535,000
Accounts payable Home office
P
Total liabilities and capital
30,000 505,000 P535,000
5
Problem 12-3 Home Office Books
Branch Books (1) Adjusting Entries
a. Investment in branch Cash
63,750
b. Investment in branch Shipment to branch
75,300
c. Accounts receivable Sales
157,500
d. Purchases Accounts payable
183,750
e. Cash
170,400
Cash
f. Accounts payable Cash g. Expenses Cash Furniture & fixtures – branch Investment in branch h. Cash
Home office Shipment from HO Home office
75,300
73,300
Accounts receivable Sales
99,000
157,500
183,750
Purchases 33,750 Accounts payable 33,750 Cash
Accounts receivable
63,750
63,750
170,400
186,000 186,000 39,900
75,300
99,000
80,100 Accounts receivable
Home office Cash
80,100
Accounts payable Cash
18,375
80,100
80,100
18,375
39,900
12,000 12,000 80,100
Investment in branch
Home office Cash
12,000 12,000
80,100 Expenses Cash
i. Retained earnings Cash
63,750
27,000 27,000
15,000 15.000
(2) Adjusting Entries j. Expenses Acc. Depreciation
1,750 1,750
k. Investment in branch Acc. Dep’n – Br. F & F
975
l. Prepaid expenses Expenses
375
m. Expenses Accrued expenses
150
975
Expenses Home office
375
Prepaid expenses Expenses
150
Expenses Accrued expenses
975 975 1,125 1,125 450 450
6
Closing Entries Home Office Books n. Sales Shipments to branch Merchandise inv., 12/31 Merchandise inv. 1/1 Purchases Expenses Income summary
157,500 75,300 72,750
o. Branch loss Investment in branch
2,100
p. Income summary Branch loss
2,100
q. Income summary Retained earnings
3.
Branch Books
60,180 183,750 41,445 20,175
2,100
Sales 99,000 Merchandise inv., 12/31 35,250 Income summary 2,100 Purchases 33,750 Shipment from HO 75,300 Expenses 27,300
Home office 2,100 Income summary
2,100
2,100 18,075 18,075
Individual Financial Statements Cebu Company – Home Office Income Statement Year Ended December 31, 2011 Sales Cost of sales Merchandise inventory, 1/1 Purchases Goods available for sale Shipment to branch Goods available for own sale Merchandise inventory, 12/31 Gross profit Expenses Net operating income Branch income (loss) Net income
P157,500 P 60,180 183,750 P243,930 ( 75,300) P168,630 ( 72,750)
95,880 P 61,620 41,445 P 20,175 ( 2,100) P 18,075
Cebu Company – Branch Income Statement Year Ended December 31, 2011 Sales Cost of sales Purchases Shipments from home office Goods available for sale Merchandise inventory, 12/31 Gross profit Expenses Net income (loss)
P 99,000 P 33,750 75,300 P109,050 35,250
73,800 P 25,200 27,300 P( 2,100)
7
Problem 10-3, continued
Cebu Company – Home Office Statement of Financial Position December 31, 2011 Assets Cash Accounts receivable Merchandise inventory, 12/31 Prepaid expenses Furniture and fixtures Less: Accumulated depreciation Branch furniture and fixtures Less: Accumulated depreciation Investment in branch Total assets Liabilities and Stockholders’ Equity Liabilities Accrued expenses Accounts payable Total liabilities Stockholders’ Equity Capital stock Retained earnings Total liabilities and stockholders’ equity
P 34,800 28,575 72,750 3,075 P30,000 8,370 P12,000 975
21,630 11,025 45,825 P217,680
P 2,025 31,950 P 33,975 P 75,000 108,705
183,705 P217,680
Cebu Company – Branch Statement of Financial Position December 31, 2011 Assets Cash Accounts receivable Merchandise inventory, 12/31 Prepaid expenses Total assets
P 6,375 18,000 35,250 1,125 P61,650
Liabilities and Capital Accounts payable Home office Total liabilities and capital
P 450 15,375 P61,650
8
Problem 12-3, continued: 4. Combined Financial Statements Cebu Company Combined Income Statement Year Ended December 31, 2011 Sales Cost of sales Merchandise inventory, 1/1 Purchases Goods available for sale Merchandise inventory, 12/31 Gross profit Expenses Combined net income
P256,500 P 60,180 217,500 P277,680 108,000
169,680 P 86,820 68,745 P 18,075
Cebu Company Statement of Financial Position December 31, 2011 Assets Cash Accounts receivable Merchandise inventory Prepaid expenses Furniture and fixtures Less: accumulated depreciation Total assets Liabilities and Stockholders’ Equity Accrued expenses Accounts payable Capital stock Retained earnings Total liabilities and stockholders’ equity
P 41,175 47,475 108,000 4,200 P42,000 9,345
32,655 P233,505 P
2,475 47,325 75,000 108,705 P233,505
Problem 12-4 Branch Books
Home Office Books (a) and (b) Closing Entries Sales 145,000 Sales 560,000 Inventory, 12/31 60,000 Inventory, 12/31 90,000 Inventory, 1/1 18,000 Shipments to branch 145,000 Shipments from HO 145,000 Inventory, 1/1 Expenses 20,000 Purchases Income summary 23,000 Expenses Income summary Income summary Home office
22,000 22,000
Investment in branch Branch income
45,000 540,000 90,000 120,000
22,000 22,000
Branch income 22,000 Income summary 22,000 Income summary 142,000 Retained earnings 142,000
9
Problem 12-4, continued: (c)
CG Corporation Combined Statement Working Paper Year Ended December 31, 2011
Eliminations Home Office Debits Cash Accounts receivable Inventory, 1/1 Investment in branch Equipment (net) Purchases Shipments from HO Expenses Total debits
36,000 54,000 45,000 70,000 95,000 540,000 90,000 930,000
Branch
Debit
Credit
7,000 29,000 18,000
Income Statement Dr (Cr)
43,000 83,000 63,000 (2) 70,000 95,000 540,000
145,000 20,000 219,000
(1)145,000 110,000
Inventory 12/31 (BS) Total assets
150,000 371,000
Credits Accounts payable Home Office Capital stock Retained earnings, 1/1 Sales Shipments to branch Total credits
54,000 144,000 560,000 145,000 930,000
145,000
Inventory, 12/31 (IS)
90,000
60,000
27,000
4,000 70,000
31,000 (2) 70,000 54,000 144,000 (705,000) (1)145,000
219,000 (150,000) 215,000
Net income Total liabilities & equity 1. 2.
Balance Sheet
215,000 142,000
142,000 371,000
To eliminate shipments to branch and shipments from HO To eliminate reciprocal accounts.
10
Problem 12-5 (1)
Oro Company Working Paper for Combined Statements Year Ended December 31, 2011
Home Office
Branch
Debits Cash Notes receivable Accounts receivable (net) Inventories Furniture & fixtures (net) Investment in Branch Cost of goods sold Operating expenses
63,000 10,500 120,600 143,700 72,150 124,050 300,750 104,250
128,700 32,850
Totals
939,000
275,700
Credits Accounts payable Common stock Retained earnings Home Office Sales Totals
Eliminations Debit Credit
Income Statements Dr (CR)
21,900 55,950 36,300
84,900 10,500 176,550 45,000 72,150
(2)135,000 (1)124,050 (2)135,000
564,050 137,100 389,100
61,500 300,000 37,500
61,500 300,000 37,500 124,050 151,650
540,000 939,000
Balance Sheet
275,700
(1)124,050 (691,650) 289,050
289,050
Net Income
9,900
(9,900) 389,100
(1) To eliminate shipments (2) To eliminate reciprocal accounts.
Closing Entries 2.
Branch Books
Sales Income Summary Cost of goods sold Operating expenses Home Office Income summary
3. Home Office Books 151,650 9,900 128,700 32,850 9,900 9,900
Branch loss 9,900 Investment in Branch
9,900
Income summary Branch loss
9,900
9,900
11
Problem 12-6 a.
b.
Investment in Branch account (Home Office Books) Unadjusted balance Error in recording cash transfer, April 8 Cash transfer recorded in subsequent year, Dec. 31 Error in recording allocated depreciation, Dec. 31 Adjusted balance
P138,200 ( 45,000) ( 15,000) 6,000 P 84,200
Home Office account (Branch Books) Unadjusted balance Error in recording salary allocation, April 5 Error in recording inventory transfer, July 6 Unrecorded allocated depreciation, Dec. 31 Adjusted balance
P(93,000) ( 200) 12,000 ( 3,000) P(84,200)
Adjusting Entries Home Office Books
Branch Books
Other income Investment in branch – Rizal
45,000
Cash
15,000
200 200
45,000
Investment in branchRizal Investment in branch Accumulated dep’n
Salary expense Home office
Home office 12,000 Shipments from HO
12,000
Depreciation expense Home office
3,000
15,000 6,000 6,000
3,000
Problem 12-7 a.
b.
Investment in Branch account (Home Office Books) Unadjusted balance, Dec. 31 Cash remittance in transit Merchandise returns in transit Adjusted balance, Dec. 31
P166,400 (30,000) (12,000) P124,400
Home Office account (Branch Books) Unadjusted balance, Dec. 31 Error in recording expense Shipment in transit Supplies charged to branch Collection of branch receivable Adjusted balance, Dec. 31
P103,200 7,200 24,000 8,000 ( 18,000) P124,400
Adjusting Entries Home Office Books Cash 30,000 Shipment to branch 12,000 Investment in branch 42,000
Branch Books Shipment from HO 24,000 Supplies 8,000 Expenses 7,200 Accounts receivable 18,000 Home office 21,200
12
Problem 12-8 (1)
Reconciliation Statement (Home Office Books) (Branch Books) Investment in Branch Home Office Unadjusted balances, 1/31 Advertising charged to branch Home office AR collected by branch Shipment in transit Error in recording receipt of merchandise Understatement of depreciation Remittance in transit, 1/31
(2)
P59,720
P 43,268 480
600 ( ( 432) (12,800) P47,088
180)
P 47,088
Adjusting Entries Home Office Books Retained earnings Cash Accounts receivable Investment in branch
Branch Books 432 12,800
Advertising 480 Shipments from HO 3,520 600 Shipment from HO 12,632 Home office
180 3,820
Problem 12-9 (1)
Branch Books Adjusting Entries Shipment from home office Operating expenses (P4,200 + P3,900) Home office
57,600 8,100 65,700
Closing Entries Sales Inventory, 12/31 (P64,580 + P57,600) Inventory, 1/1 Shipment from HO (P623,200 + P57,600) Operating expenses Income summary
778,200 122,180
Income summary Home office
116,990
47,800 680,800 54,790 116,990
116,900
13
Problem 12-9, continued:
(2)
Home Office Books Accounts receivable Investment in branch Cash (P20,000 + P19,200) Investment in branch Branch income
(3)
470 330 800 116,990 116,900
Reconciliation Statement
Unadjusted balances, 12/31 Error in recording remittance to branch Shipment in transit Expenses charged to branch Branch net income Freight erroneously charged to branch Cash remittance in transit to HO Adjusted balances, 12/31
Home Office Books Branch Books (Investment in Branch) (Home Office) P 206,344 P 140,974 20,000 57,600 8,100 116,990 116,990 ( 470) ( 19,200) P 323,664 P 323,664
Problem 12-10 a.
Branch Books: Home Office account balance, January 1, 2011 Remittance to the home office Shipments received from the home office (P440,000 – P39,000) Credit memo from the home office Merchandise returned to the home office Home Office account balance, December 31, 2011
b.
P 134,000 (189,000) 401,000 12,000 ( 10,400) P 347,600
Reconciliation Statement Home Office Books (Investment in Branch)
Branch Books
Unadjusted balances, 12/31/011 Remittance in transit Shipment in transit Advertising charged to branch Accounts receivable collected by HO Error in recording remittance
P 397,100 ( 42,000)
P 347,600
12,000
39,000 17,000 (24,500) (12,000)
Adjusted balances, 12/31/011
P 367,100
P 367,100
(Home Office )
14
Problem 12-1111 a.
P 2,000 Sales (P 27,000 + P 33,000 + P 26,000) …………………. Cost of Goods Sold (P 36,000 + P 18,000) ………………. Gross Profit ……………………………………………… Rent Expense …………………………………………….. Property Tax Expense …………………………………… Depreciation Expense …………………………………… Miscellaneous Expense …………………………………. General Corporate Expense ……………………………… Net Income ………………………………………………
b.
P 86,000 (54,000) P 32,000 P 4,000 5,000 4,000 11,000 6,000 (30,000) P 2,000
P 180,000 Initial Transfers …………………………………………. June Inventory Shipment ……………………………….. Property Tax Payment ………………………………….. September Inventory Shipment ………………………… Expense Allocation …………………………………….. Cash Transfer …………………………………………... Balance in Home Office/Branch Accounts (correct) …..
c.
Journal Entries – Tarlac Branch 2011 1/10 Cash …………………………………. Inventory ……………………………. Equipment …………………………… Home Office …………………… 1/20 2/1
4/1
5/1 6/5
Rent Expense ………………………… Cash ……………………………. Cash ………………………………….. Sales ……………………………
P 188,000 18,000 5,000 26,000 6,000 (63,000) P 180,000
30,000 36,000 122,000 188,000 4,000 4,000 27,000 27,000
Cost of Goods Sold ………………….. Inventory ……………………….
18,000
Cash …………………………………. Sales …………………………...
33,000
Cost of Goods Sold …………………. Inventory ………………………
18,000
Miscellaneous Expenses ……………. Cash …………………………...
7,000
Inventory ……………………………. Home office …………………...
18,000
18,000
33,000
18,000
7,000
18,000
15
Problem 12-11, continued:
7/6 9/9 10/1
11/1 12/22 12/31 12/3
d.
Property Tax Expense ………………. Home Office …………………..
5,000
Inventory …………………………… Home Office ………………….
26,000
5,000
26,000
Cash ………………………………… Sales ………………………….
26,000
Cost of Goods Sold ……………….. Inventory ……………………..
18,000
Miscellaneous Expenses …………... Cash ………………………….
4,000
Home Office ……………………… Cash ………………………….
63,000
Depreciation Expense ……………. Accumulated depreciation …..
4,000
General Corporate Expenses ……… Home Office …………………..
6,000
26,000
18,000
4,000
63,000
4,000
6,000
TARLAC BRANCH Statement of Financial Position December 31, 2011 Assets Cash ……………………………………………. Inventory ………………………………………. Equipment ……………………………………... Accumulated Depreciation ……………………. Total Assets …………………………… Equity Home Office* …………………………………..
P 38,000 26,000 P 122,000 (4,000)
118,000 P 182,000
P 182,000
*Home office balance is P 180,000 as computed in Part b plus the P 2,000 net income for the period.
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