CHAPTER 13 MULTIPLE CHOICE 13-1:
c
13-2:
a
Goods available for sale: At billed price (P30,000 + P180,000 At cost (P!10,000 " 1!0# Balance of Allowance Allowance for Overvaluation Overvaluation account before adjustment 13-3:
c
&'terco)pa'* i've'tor* profit (&&P before closi' -ess: &&P fro) fro) s.ip)e't fro) .o)e .o)e office /illed price Cost (P300,000 " 1!0# &&P fro) bei''i' i've'tor* at billed price ivided b* Cost of branch’s beginning inventor 13-4:
P300,000 !%0,000
Billed Price Price P1%,000 110,000
% 1%0# 1%0#
Cost P10,000 $3,333
%,000
1%0#
3,333
%0,000 P 1 1,000 !0# P !0,000
Overvaluation P %,000 3,$ P617$ 1,$ P$0,000
b
.ip)e't to bra'c., at billed price .ippi' cost Total cost old (%0# %nventor 13-6:
P ,000
a
/ei''i' i've'tor* fro) H2 .ip)e'ts /ala'ce before ad45st)e't E'di' i've'tor* fro) H2 "e#uired adjustments adjustments
13-5:
P!10,000 1$%,000 P 35,000
P3$%,000 !,000 P3$$,000 188,%00 P&!!,500
a
.ip)e't to bra'c., at cost .ippi' cost /illed price old (%0# %nventor, at billed 'rice
P31!,%00 !,000 P316,%00 1%$,!%0 P&5(,)50
1$
13-7:
c
Ho)e office acco5't bala'ce after closi' bra'c. profit -ess: bra'c. profit %nvestment in branch account balance balance before closing branch 'rofit 'rofit 13-8:
d
/ra'c. e'di' i've'tor*, at billed price Ac5ired fro) .o)e office, at billed price: Cost (P,000 " !0# 9ar5p Purchased from outsiders outsiders 13-9:
P$%,000 130,000 P*35,000
P %0,000 P30,000 ,000
3,000 P &$,000
b
Cost of oods sold ; Ho)e office Cost of oods sold ; /ra'c.: /illed price -ess: ov overval5atio' (P110,000 ; P<0,000 Combined cost of goods sold
P%<0,000 P300,000 !0,000
!80,000 P!(0,000
13-10: c 13-11: d
2verval5atio' of bra'c. e'di' i've'tor* ac5ired fro) H2: /illed price Cost (P!8,00 " 130# Adjusted balance of allowance allowance for overvaluation overvaluation account
P !8,00 !!,000 P *,*00
13-12: b
.ip)e't fro) .o)e office E=pe'ses Cas. re)itta'ce to .o)e office +ome Office account balance balance before closing
P <0,000 1$,000 ($0,000 P 3(000
13-13: b
.ip)e't to bra'c., at cost E'di' i've'tor*, at cost (P$0,000 " 30# Cost of oods sold >rei.t (P,000 = P%0,600"P$!,000 -otal
P $!,000 ( !1,00 P %0,600 6,!00 P 5$,*00
13-14: b (!0# of P30,000
160# 13-15: b (P1%1,!00 " 160#
18
13-16: c
ales Cost of oods sold .ip)e'ts .ip)e'ts fro) .o)e office office (P1%1,!00" (P1%1,!00"160# 160# P108,000 P108,000 &'ve'tor*, 1"1 (P!8,3%0 " 160# !0,!%0 &'ve'tor*, 1!"31 (P!%,!00 " 160# ( 18,000 Gross profit E=pe'ses Branch 'rofit as far as the home office is concerned
P!$0,000
110,!%0 P1%<,$%0 <0,000 P *.,(50
13-17: c
?'sold )erc.a'dise -ess: 9erc.a'dise ac5ired fro) .o)e office, at billed price 9erc.a'dise ac5ired fro) o5tsiders 9erc.a'dise ac5ired fro) .o)e, at cost (P$,%00 " !0# Branch inventor at cost, cost, &)/3&
P 0,000 6%,000 P 1%,000 3$,%00 P 5),500
13-18: a
/ra'c. i've'tor*, 1"1 Ac5ired fro) .o)e office ; at billed price: 2verva 2verval5a l5atio tio' ' @P<<,< @P<<,<00 00 ; (P3<0, (P3<0,000 000 ; P300,0 P300,000 00 C Co ost (P<,<00 " 30# Purchases from outsiders outsiders
P %6,00 P <,<00 <,<00 33,000
6!,<00 P &&,(00 &&,(00
13-19: c
Ac5ired fro) .o)e office @(P0,000 = 80# 1!0# Ac5ired fro) o5tsiders (P0,000 = !0# Branch inventor, inventor, &)/3& at cost
P 60 60,000 1!,000 P 5),000
13-20: b
ales (P168,000 + P166,000 Cost of sales ; at cost to .o)e office: .ip)e't .ip)e't fro) fro) .o)e .o)e office office (P108 (P108,000 ,000 " 1!0# 1!0# P<0,000 P<0,000 P5rc.ases %!,000 &'ve'tor*, 1!"31 ('o7 1< above (%!,000 Gross profit E=pe'ses (P$,000 + P!6,000 Branch net income 1actual2
P1
<0,000 P10!,000 100,000 P ),000
13-21: b
AlloBa'ce for overval5atio' acco5't bala'ce 2verval5atio' o' t.e s.ip)e't (P!00,000 = !%# 2verval5atio' o' t.e bra'c. bei''i' i've'tor* Cost of bra'c. bei''i' i've'tor* (P$,%00 " !%# Branch beginning inventor at at billed 'rice
P %$,%00 %0,000 P $,%00 30,000 P 3(,500
1<
13-22: b
ales Cost of oods sold ; cost to .o)e office /ei''i' i've'tor* P 30,000 .ip)e't fro) .o)e office !00,000 E'di' i've'tor* (P60,000 " 1!%# ( 3! 3!,000 Gross profit E=pe'ses Branch net income as far as the home office office is concerned
P600,000
1<8,000 P!0!,000 100,000 P&0),000
13-23: b
/ra'c. i've'tor*, 1"1 Ac5ired fro) .o)e at billed price 2verval5atio' @P!6,000 ; (P80,000 ; P0,000 P0,000 P 6,000 At cost @(P6,000 (P! (P!0,000 " P0,000 1!,00 ,000 Ac#uired from outsiders
P !0,000
1,00 ,000 P $,000
13-24: a
ales Cost of sales (at cost to .o)e office &'ve'tor*, 1"1 (P1!,000 + P6,000 P1,000 .ip)e'ts fro) .o)e office 0,000 P5rc.ases 30,000 &'ve &'ve't 'tor or* *, 1!"3 1!"31 1 @(P! @(P!0, 0,00 000 013 133 3 1"3# 1"3# +P, +P,00 000 0 (!1, (!1,00 000 0 Gross profit E=pe'ses Branch net income 1actual2
P!00,000
8%,0 8%,000 00 P11%,000 0,000 P 55,000
13-25: a
&'ve'tor*, 1"1 .ip)e'ts fro) .o)e office 2verval5atio' Cost of oods available for sale Percentage of mar4u' 1P(),500 1P(),500 / P3*),5002
P $%,000 30,000 ( $!,%00 P3!,%00 )0
13-26: b
!0
13-27: a
/illi' perce'tae above cost (P!0,000 " P80,000 /ra'c. i've'tor*, "1 ; at cost (P1!,000 " 1!%# Ho)e office i've'tor*, "1 P5rc.ases Goods available for sale &'ve'tor*, "30 ; at cost: /ra'c. (P10,000 " 1!%# Ho)e office Combined cost of goods sold
!%# P
<,00 60,000 10,000 P!0<,00
P 8,000 0,000
8,000 P&$&*00
13-28: d
ales Cost of oods sold Gross profit E=pe'ses Combined net income
P6%0,000 161,00 P308,600 1%0,000 P&5!,$00
13-29: d
ales Cost of oods sold: &'ve'tor*, 1"1: Ho)e office P%$,%00 /ra'c. /ra'c. (P!!,!%0 (P!!,!%0 " 1!%# 1!%# 1$,800 1$,800 P $%,300 $%,300 P5rc.ases 610,000 Goods available for sale P 68%,300 &'ve'tor*, 1!"31: Ho)e office P$1,!%0 /ra' /ra'c. c. (P!< (P!<,! ,!%0 %0"1 "1!0 !0# # !6,3 !6,3$% $% <%,! <%,!% % Gross profit E=pe'ses Combined net income
P8$,%00
38<, 38<,$ $% % P!<$,8!% !61,$%0 P 5*,0(5
13-30: a ales Cost of oods sold: &'ve'tor*, 1"1: Ho)e office /ra' /ra'c. c. @P1% @P1%,0 ,000 00 + (P6< (P6<,0 ,000 00 " 1!!7 1!!7%# %# P5rc.ases Goods available for sale &'ve'tor*, 1!"31: Ho)e office /ra'c /ra'c. . @P11,0 @P11,000 00 + (P%!,0 (P%!,000 00 " 133 1"3# 1"3# Gross profit E=pe'ses Combined net income
P<,000
P10,000 %%,0 %%,000 00
P110,000 %0,000 %0,000
P!1% P!1%,0 ,000 00 60,000 P$%,000
10,00 10,000 0
%1%,00 %1%,000 0 P1%6,000 16%,000 P .,000
!1
13-31: a T.e e'tries )ade b* t.e bra'c. to record t.e i'terbra'c. tra'sfer of )erc.a'dise are: Books of Branch 1: Ho)e office 1<,%00 >rei.t i' 3,%00 .ip)e't fro) .o)e office 1,000 Books of Branch 3: .ip)e't fro) .o)e office 1,000 >rei.t i' 6,000 Cas. !,%00 Ho)e office 1$,%00
T.erefore t.e .o)e office Bo5ld )ae t.e folloBi' e'tr*: %nvestment in Branch 3 &(,500 67cess freight ),000 %nvestment in Branch &
&.,500
13-32: a
?'ad45sted bala'ces Error i' recordi' s.ip)e't Error i' recordi' e=pe'se ?'recorded cas. re)itta'ce Adjusted balances
(Hom (Homee offi office ce book books) s) Investment in branch branch $$,000
(31,000 $*,000
(Bra (Branc nch h book books) s) Home office 1,000 (10,000 %,000 $*,000
13-33: c 13-34: a Home office books books &'v i' /acolod !%,000 &'v i' Ceb5 !%,000
Cebu branch books Ho)e office !%,000 Cas. !%,000
Bacolod branch books books Cas. !%,000 Ho)e office !%,000
&'v i' /acolod 36,300 &'v i' Ceb5 36,300
Ho)e office 36,300 $00 AR 3%,000
Cas. 36,300 Ho)e office 36,300
&'v i' /acolod !,%00 Ho)e office !1!,%00 E=pe E=pe's 'ses es 1%0, 1%0,00 000 0 E=pe E=pe's 'ses es 3$,% 3$,%00 00 &'v i' Ceb5 !1!,%00 Cas. !%0,000
E=pe'ses !,%00 Ho)e Ho)e offi office ce !,% !,%00 00
&'v i' Ceb5 !%3,000 >rei.t i' 3,000 to bra' bra'c. c. !00, !00,00 000 0 fro) fro) H2 !%0, !%0,00 000 0 Allo AlloBa Ba'c 'cee %0,0 %0,000 00 Ho)e Ho)e offi office ce !%3 !%3,0 ,000 00 Cas. 3,000 &'v i' /acol /acolod od !%!,$0 !%!,$00 0 Ho)e Ho)e offic officee !%3,00 !%3,000 0 E=cess frei.t 300 fro) H !%3,000 &'v i' Ceb5 !%3,000
!!
(Ho)e office boos Investment in Cebu Branch Branch !%,000 36,300 !1!,%00 !% !%3,000 !%3,000 !%3, 000 %!6,800 %!6, 800 )(&,!00
(/acolod bra'c. boos Home Office !%,000 36,300 !,%00 !%!,$00 3($,500
!3
PROBLEMS
Proble) 131 (a
8ournal 6ntries +ome Office Boos
Branch Boos
(1 &' &'vest)e't i' bra'c. Cas.
18,000
(2 &'vest)e't i' bra'c. Cas.
3,000
(3 &' & 'vest)e't i' bra'c. .ip)e't to bra'c. AlloBa'ce for over al5atio' (4
18,000
18,000
E5ip)e't Ho)e office
3,000
3,000
Re't e=pe'se Ho)e office .ip)e't fro) H2 Ho)e office
100,000
80,000
100,000
18,000
3,000
100,000
!0,000
Do e'tr*
2perati' e=pe'ses e=pe'ses Cas. Cas.
11,000 11,000 10%,000
ales (5 Cas.
0,000 &'vest)e't i' bra'c.
(b
0,000
Ho)e office Cas.
10%,000 0,000 0,000
9oring Pa'er 6limination 6ntries (1
(!
(3
Ho)e office 1,000 &'vest)e't i' bra'c. To eli)i'ate reciprocal acco5'ts co)p5ted as folloBs: E5ip)e't p5rc.ased P 18,000 Re't paid 3,000 &'ve'tor* s.ipped 100,000 Cas. tra'sfer ( 0,000 /ala'ce P 1,000 .ip)e't to bra'c. Allo AlloBa Ba'c 'cee for for over overva val5 l5at atio io' ' of bra bra'c 'c. . i've i've't 'tor or* * .ip)e't fro) .o)e office To eli)i'ate i'terco)pa'* s.ip)e'ts &'ve'tor*, 1!"31 (&'co)e state)e't &'ve'tor*, 1!"31 (/ala'ce .eet To red5ce i've'tor*, 1!"31 to cost7
1,000
80,000 !0,0 !0,000 00 100,000
%,000 %,000
!6
(c
Closing 6ntries Branch Boos
ales &'ve'tor*, 1!"31 Re't e=pe'se .ip)e't fro) .o)e office 2perati' e=pe'ses &'co)e s5))ar* &'co)e s5))ar* Ho)e office
10%,000 !%,000 3,000 100,000 11,000 1,000 1,000 1,000
Proble) 13! a!
B"a#c$ B%%&'
E5ip)e't .ip)e't fro) .o)e office Cas. Ho)e office
%0,000 0,000 10,000
P5rc.ases Cas. or acco5'ts pa*able
30,000
Prepaid re't Ho)e office
10,000
Cas. Acco5'ts receivable ales
60,000 %0,000
Advertisi' e=pe'se alar* e=pe'se Cas.
8,000 %,000
Ho)e office Cas.
1!0,000
30,000
10,000
<0,000
13,000 10,000 10,000
Ho)e office Acco5'ts receivable
3,000
Re't e=pe'se Prepaid re't
%,000
3,000
%,000
!%
H%) O**+c) B%%&'
&'vest)e't i' bra'c. 1!0,000 E5ip)e't .ip)e't to bra'c. AlloBa'ce for overval5atio' of bra'c. i've'tor* Cas. o record assets sent to branch &'vest)e't i' bra'c. Cas. o record rent e!"ense of the branch
10,000
Cas.
10,000
10,000
10,000
Cas.
3,000
&'vest)e't i' bra'c. o record collection of branch receivable 7 b!
!0,000
10,000
&'vest)e't i' bra'c. o record cash remittance from branch
%0,000 60,000
3,000
I#c%) S,a,))#,
ales Cost of oods sold .ip)e't fro) .o)e office ; at cost P5rc.ases Goods available for sale E'di' i've'tor*: >ro) .o)e office (1"3 >ro) o5tsiders (1"6 Gross profit E=pe'ses: Advertisi' e=pe'se alar* e=pe'se Re't e=pe'se Det i'co)e
P<0,000 P60,000 30,000 $0,000 P13,333 $,%00
(!0,833
P 8,000 %,000 %,000
6<,1$ P60,833
18,000 P!!,833
P"%b) 13-3 a!
&'vest)e't i' /ra'c. acco5't ; bei''i' bala'ce Cas. tra'sfer &'ve'tor* tra'sfer Re't allocated E=pe'ses allocated &'ve'tor* tra'sfer Tra'sportatio' allocated ?'ad45sted bala'ce ; &'vest)e't i' /ra'c. acco5't
P 8 8,000 ( 3!,000 36,%00 1,000 3,000 6,000 3,000 P161,%00
!
b!
Ho)e 2ffice acco5't ; bei''i' bala'ce &'ve'tor* tra'sfer Re't allocated E=pe'ses allocated &'ve'tor* tra'sfer (error )ade Cas. tra'sfer Ho)e 2ffice acco5't ; 5'ad45sted bala'ce
c!
R)c%#c++a,+%# S, S ,a,))#,
?'ad45sted bala'ces, 1"31 ?'recorded cas. tra'sfer Error i' recordi' tra'sfer (overstated E=pe'se allocatio' 'ot recorded Ad45sted bala'ces, 1"31
P %6,000 36,%00 1,000 3,000 6,000 ( $6,000 P 8!,%00
Investment in Branch Branch P161,%00 ( $6,000
Home Office P 8!,%00 18,000 ( 3,000
P $,%00
P $,%00
Proble) 136 a!
b!
B%%&' %* B"a#c$ .
.ip)e't fro) .o)e office >rei.ti' Ho)e office
%,000 300
Ho)e office .ip)e't fro) office
%,800 %,800
B%%&' %* B"a#c$ /
.ip)e't fro) .o)e office >rei.ti' Ho)e office c!
%,300
%,000 00 %,00
B%%&' %* ,$) H%) O**+c)
&'vest)e't i' bra'c. ; .ip)e't to bra'c. ; Cas.
%,300
&'vest)e't i' bra'c. ; F &'terbra'c. frei.t e=pe'se &'vest)e't i' bra'c. ;
%,000 00
.ip)e't to bra'c. ; .ip)e't to bra'c. ; F
%,000
%,000 300
%,00
%,000
!$
Maa&a' C%a# C%b+#a,+%# %"&'$)), %"&'$)), /)a" E#d)d )c)b)" 31 2008
;alaas
)b+,' Cas. Acco5'ts receivable &'ve'tor*, 1!"31 &'vest)e't i' bra'c. -a'd, bld, a'd e5ip)e't .ip)e't fro) office P5rc.ases epreciatio' e=pe'se Advertisi' e=pe'se Re't e=pe'se 9iscella'eo5s e=pe'se &'ve'tor*, 1"1 Total debits
!%,000 108,000 !0<,000 !0$,000 360,000 368,000 !%,000 3,000 1!,000 60,000 1$%,000 1,%!%,000
18,000 !%,000 6!,000 11!,000 <,000 8,000 1%,000 %,000 !0,000 3%,000 3$,000
C")d+,' Acc5)5lated depreciatio' Acco5'ts pa*able Dotes pa*able Ho)e office
80,000 3$,000 !!0,000
1,000 1%,000 1$,000
Co))o' stoc Retai'ed ear'i's, 1"1 ales .ip)e't to bra'c. &'ve'tor*, 1!"31
100,000 !60,000 %!<,000 110,000 !0<,000
1!$,000 6!,000
Adjustments and 6liminations
(6 16 16,000
(% 1 1,000 ($!0$,000
(3 16,000
(110,000
63,000 133,000 !6<,000 6%!,000
(1 (1 (1
<, <,000 ,000 !, !,000 (! 10,000
368,000 33,000 0,000 !3,000 !,000 !00,000 8$$,000
($!0$,000
<,000 %!,000 !!0,000
(1 1$,000 (3 16,000
100,000 (! 10,000
(!30,000 (%%,000
(110,000 (% 1 1,000
(6 16 16,000
Co)bi'ed 'et i'co)e
(!6<,000 (1$<,000
Co)bi'ed retai'ed ear'i's Totals
%ncome "etained :tatement 6arnings /ala'ce
(1$<,000 (60<,000
1,%!%,000
3$,000
388,000
388,000
(60<,000 8$$,000
Adjustments and 6limination 6limination 6ntries
(1
(!
(3
Advertisi' e=pe'se Re't e=pe'se 9iscella'eo5s e=pe'ses Ho)e office #nrecorded e!"enses allocated to the branch
<,000 ,000 !,000 1$,000
Retai'ed ear'i's, 1"1 10,000 &'ve'tor*, 11 o eliminate unreali$ed inventor "rofit of "recedin& ear
10,000
.ip)e't fro) .o)e office Ho)e office #nrecorded shi"ments
16,000
16,000
!8
(6
(%
(
($
&'ve'tor*, 1!"31 (debits &'ve'tor* (credits 'hi"ment not et received b the branch
16,000
&'ve'tor*, 1!"31 (debits &'ve'tor* (credits o reduce endin& inventor to cost
1,000
.ip)e't to bra'c. .ip)e't fro) .o)e office o eliminate intercom"an shi"ments
110,000
Ho)e office &'vest)e't i' bra'c. o eliminate reci"rocal accounts
!0$,000
16,000
1,000
110,000
!0$,000
P"%b) 13-6 a!
E++#a,+# E# E#,"+)'
(1
(!
(3
(6
(%
Ho)e office &'vest)e't i' bra'c. ; ilver
3<%,000
Ho)e office &'vest)e't i' bra'c. ; 2pal
!0,000
3<%,000
!0,000
?'realied i'traco)pa'* profit ; ilver ?'realied i'traco)pa'* profit ; 2pal &'ve'tor* ; fro) .o)e office
!0,000 1,000
&'ve'tor* &'ve'tor* ; fro) .o)e office
<0,000
?'realied i'traco)pa'* profit ; ilver E5ip)e't
60,000
3,000
<0,000
60,000
!<
+#,% C%a# Baa#c) S$)), %"&+# Pa)" )c)b)" 31 2008
Cas. Acco5'ts receivable &'ve'tor* &'ve'tor* ; fro) .o)e office -a'd /5ildi's a'd e5ip)e't &'vest)e't i' bra'c. ; ilver &'vest)e't i' bra'c. ; 2pal Total debits Acc5)5lated depreciatio' Acco5'ts pa*able /o'ds pa*able Co))o' stoc Retai'ed ear'i's Ho)e office ?'realied i'traco)pa'* profit ilver 2pal Total credits
b!
Ho)e
ilver ilv er
2pal
Office 81,000 100,000 !0,000
Branch !0,000 60,000 %0,000 $0,000
Branch 1%,000 !%,000 66,000 %,000
30,000 3%0,000
!0,000 !00,000
%0,000
30,000
!,0%%,000
1!0,000 6%,000
80,000 !0,000
680,000 1$%,000 600,000 300,000 $00,000
$0,000 $00,000 3<%,000 !0,000 1,8,000 !80,000 110,000 600,000 300,000 $00,000
3<%,000
!0,000
0,000 1,000 1,8,000
%0,000
30,000
Eli)i'ati Eli)i 'atio's o's
Credit
(6 <0,000
Combined 11,000 1%,000 666,000
( 3 3,000 (6 <0,000 (% 60,000 (13<%,000 (!!0,000
1!0,000 1,!10,000
(13<%,000 (!!0,000 (3 !0,000 (% 60,000 (3 1,000 8!1,000
8!1,000
!,0%%,000
+#,% C%a# C%b+#)d Baa#c) S$)), )c)b)" 31 2008 ''),' Cas. Acco5'ts receivable &'ve'tor* -a'd /5ildi's a'd e5ip)e't -ess: Acc5)5lated depreciatio' Total assets L+ab++,+)' a#d S,%c&$%d)"' E+, =iabilities Acco5'ts pa*able /o'ds pa*able Total liabilities :tocholders’ 6#uit Co))o' stoc Retai'ed ear'i's Total liabilities a'd stoc.olders e5it*
P 11,000 1%,000 666,000 1!0,000 P1,!10,000 680,000
$30,000 P1,%$%,000
P 1$%,000 600,000 P %$%,000 P 300,000 $00,000
1,000,000 P1,%$%,000
30
P"%b) 13-7 a!
b!
B%%&' %* B"a#c$ P
.ip)e't fro) .o)e office >rei.ti' Ho)e office
8,000 %0
Ho)e office .ip)e't fro) .o)e office >rei.ti' Cas.
8,1!0 8,000 %0 $0
B%%&' %* B"a#c$ ;
.ip)e't fro) .o)e office >rei.ti' Ho)e office c!
8,0%0
8,000 80 8,080
B%%&' %* H%) O**+c)
&'vest)e't i' bra'c. ; P .ip)e't to bra'c. ; P Cas.
8,0%0
&'vest)e't i' bra'c. ; I &'terbra'c. frei.t e=pe'se &'vest)e't i' bra'c. ; P
8,080 60
.ip)e't to bra'c. P .ip)e't to bra'c. ; I
8,000
8,000 %0
8,1!0
8,000
P"%b) 13-8 )b+,': Cas. J P3,000 (add t.e boo val5es a'd a'd i'cl5de t.e P<,000 tra'sfer tra'sfer i' tra'sit Acco5'ts receivable J P118,000 &'ve'tor*, &'ve'tor*, 1!"31 J P1%1,000 (bra'c. bala'ce Bo5ld be P81,000 B.e' t.e s.ip)e't i' tra'sit is i'cl5ded7 T.is bala'ce )5st be be ad45sted to cost of P%6,000 P%6,000 (P81,000 1%0# a'd t.e' add to .o)e office office bala'ce of P<$,0007 P<$,0007 &'vest)e't i' bra'c. J 0 (eli)i'ated -a'd, b5ildi's a'd e5ip)e't J P60,000 .ip)e't fro) .o)e office J 0 (eli)i'ated P5rc.ases J P6!<,000 epreciatio' e=pe'se J P!8,000 (add t.e tBo boo val5es a'd t.e *eare'd allocatio' Advertisi' e=pe'se e=pe'se J P%8,000 (add t.e tBo boo val5es a'd t.e *eare'd *eare'd allocatio' allocatio' Re't e=pe'se J P30,000 (add t.e tBo boo val5es a'd t.e *eare'd allocatio' 9iscella'eo5s e=pe'se J P100,000 (add t.e tBo boo val5es a'd t.e *eare'd allocatio' allocatio' &'ve'tor*, &'ve'tor*, 1"1 J P16%,000 (bra'c. bala'ce is ad45sted to cost of P!6,000 (P3,000 " 1%0#, a'd t.e' added to .o)e office bala'ce7
31
Total debits J P1,%%%,000 (add t.e above totals C")d+,' Acc5)5lated depreciatio' J P108,000 Acco5'ts pa*able J P106,000 Dotes pa*able J P180,000 P180,000 Ho)e office J 0 (eli)i'ated Co))o' stoc J P0,000 (.o)e office bala'ce Retai'ed ear'i's, 1"1 J P!68,000 P!68,000 (.o)e office bala'ce after after red5ctio' of P1!,000 5'realied 5'realied profit i' bei''i' i've'tor* of bra'c.7 Cost is P!6,000 (P3,000 " 1%0# B.ic. i'dicates t.e P1!,000 5'realied7 ales J P$06,000 .ip)e't to bra'c. J 0 (eli)i'ated &'ve'tor*, 1!"31 J P1%1,000 Total credits J P1,%%%,000 (add t.e above totals R)c%#c++a,+%# S,a,))#, &'vest)e't i' /ra'c. acco5't bala'ce (Ho)e office boos ?'recorded cas. tra'sfer Ad45sted bala'ce
P1$$,000 ( <,000 P18,000
Ho)e 2ffice acco5't bala'ce (/ra'c. boos &'ve'tor* tra'sfer i' tra'sit E=pe'se allocated 'ot *et recorded Ad45sted bala'ce
P1!3,000 !1,000 !6,000 P18,000
P"%b) 13-9 H%) O**+c) B%%&' Case A (1 &'vest)e't i' bra'c. bra'c. .ip)e't to bra'c. ?'realied i've'tor* profit
0,000
(! Cas. &'vest)e't i' bra'c. Closing entries: (3 ales &'ve'tor*, 1!"31 .ip)e't to bra'c. P5rc.ases E=pe'ses &'co)e s5))ar* (6 &'vest)e't i' bra'c. bra'c. /ra'c. i'co)e s5))ar* /ra'c. i'co)e s5))ar* &'vest)e't i' bra'c.
1,!00
0,000
Case C <0,000
0,000 1%,000 1,!00
1,!00 130,000 8,000 0,000
0,000 30,000 1,!00
1,!00 130,000 8,000 0,000
1%0,000 1$,!00 30,800
1,!00 130,000 8,000 0,000
1%0,000 1$,!00 30,800
1%0,000 1$,!00 30,800
13,000 13,000 %00
16,000 %00
?'realied i've'tor* profit /ra'c. i'co)e s5))ar* &'co)e s5))ar* &'co)e s5))ar* Retai'ed ear'i's
Case B $%,000
13,%00
16,000 !$,000
%00 13,000 63,800
63,800 63,800
16,000 13,000 63,800
63,800
63,800
3!
I%c%' B"a#c$ B%%&'
Case Cas e /
Ca')
(1 .ip)e't fro) .o)e office office Ho)e office
0,000
(! Acco5'ts receivable ales
81,000
(3 Cas.
6,000
$%,000 0,000 81,000
16,000
(% Ho)e office Cas.
1,!00
<0,000 81,000
81,000 6,000
6,000
(6 E=pe'ses Cas.
<0,000 $%,000
81,000
Acco5'ts receivable
Case Cas e C
81,000 6,000
6,000 16,000
16,000
6,000 16,000
16,000 1,!00
1,!00
16,000 1,!00
1,!00
1,!00
Closing entries
( ales &'ve'tor* 1!"31 .ip)e't fro) H2 E=pe'ses &'co)e s5))ar*
81,000 ,000
($ &'co)e s5))ar* Ho)e office
13,000
Ho)e office &'co)e s5))ar*
81,000 $,%00 0,000 16,000 13,000
81,000 <,000 $%,000 16,000
<0,000 16,000
%00
16,000
%00
16,000
13,000
%00
16,000
33
%"&+# Pa)" *%" C%b+#)d <+#a#c+a S,a,))#,' )c)b)" 31 2008
+ome Office Office
Branch
Eli)i'ati Eli)i 'atio's o's
Combined
I#c%) S,a,))#, ales 9erc.a'dise i've'tor*, 1!"31 .ip)e't to bra'c. Total credits
130,000 8,000 0,000 1<8,000
.ip)e't fro) .o)e office P5rc.ases E=pe'ses Total debits Det i'co)e(loss i'co)e(loss carried forBard forBard
1%0,000 1$,!00 1$,!00 30,800
16,000 106,000 (16,000
1%0,000 31,!00 181,!00 63,800
81,000 <,000
!11,000 16,000 !!%,000
(3 3, 3,000 (! 0,000
<0,000 <0,000
(! <0,000
R),a+#)d Ea"#+#' S,a,))#, Det i'co)e (loss (loss fro) above above Retai'ed ear'i's, 1!"31 Carried forBard
30,800
(16,000
63,800
30,800
(16,000
63,800
Baa#c) S$)), Cas. (overdraft Acco5'ts receivable 9erc.a'dise i've'tor*, 1!"31 &'vest)e't i' bra'c. Total debits
3<,000 6%,000 8,000 !8,800 1!0,800
(11,!00 1$,000 <,000
!$,800 !,000 16,000 103,800
Acco5'ts pa*able ?'realied i've'tor* profit Capital stoc Retai'ed ear'i's, fro) above Ho)e office Total credits
!0,000 30,000 60,000 30,800 1!0,800
(3 3, 3,000 (1 !8,800
16,800
(! 30,000 (16,000 !8,800 16,800
(1 !8,800 1!1,800
1!1,800
!0,000 60,000 63,800 103,800
36
P"%b) 13-10 (1 (1
C%#'%+da,)d %"&+# Pa)" +ome Office
Branch A
Branch B
33,000 $0,000
!!,000 !1,000
13,000 1%,000
2t.er c5rre't assets &'vest)e't i' /ra'c. A &'vest)e't i' /ra'c. / Cost of sales K
%0,000 6%,000 6!,000 80,000
!%,000
!3,000
%$,000
6%,000
E=pe'ses
<0,000 610,000
!%,000 1%0,000
!0,000 11,000
60,000 100,000 %0,000
1%,000
11,000
6%,000
30,000
Credits C5rre't liabilities Capital stoc Retai'ed ear'i's, La'7 1 Ho)e 2ffice
AlloB7 AlloB7 for overval5atio' of /ra'c. i'v7 ; /ra'c. A AlloB7 AlloB7 for overval5atio' of /ra'c. i'v7 ; /ra'c. / ales
13,000 1!,000 1<%,000 610,000
Adj > 6lim 6lim 1dr2 Cr
Balance :heet
8,000 A (1!,000 / 8,000 6%,000 6!,000 / (8,000 C !%,000
110,000 <8,000
(1%,000 (13%,000 !$,000
,000 100,000 %0,000 A 1!,000 (8$,000 C (13,000 C (1!,000
<0,000 1%0,000
$%,000 11,000
30,000
Det i'co)e
%ncome :tatement
0,000
0,000 !$,000
Boo value of cost of sales sales from home office and branches branches
+ome Office
&'ve'tor*, La'5ar* 1, P5rc.ases .ip)e't to bra'c. .ip)e't fro) .o)e office Goods available for sale &'ve'tor*, ec7 31 Cost of sales
P 80,000 10,000 ( <0,000 P1%0,000 ( $0,000 P 80,000
%nvestment in Branch A
%nvestment in Branch B Branch B
P 18,000
P!6,000
0,000 P $8,000 ( !1,000 P %$,000
3,000 P 0,000 (1%,000 P 6%,000
3%
(2 R)c%#c++a R)c%#c++a,+%# ,+%# %* %* H%) O**+c) O**+c) a#d a#d I#=)',)# I#=)',)#,, +# B"a#c$ B"a#c$ acc%#,' acc%#,'7
?'ad45sted bala'ces, ec731
/oos of Ho)e 2ffice %nvestment %nvestment %n Branch A %n Branch B P 6%,000 P 6!,000
/oos of B"a#c$ +ome Office Office P 6%,000
/oos of B"a#c$ B +ome Office Office P 30,000
.ip)e'ts i' tra'sit to /ra'c. / /ra' /ra'c. c. Prof Profit it (c. (c.ed ed5l 5lee 1 Ad45sted bala'ces, ece)ber 31
1!,000 8,00 8,000 0 P %3,000
10,0 10,000 00 P %!,000
8,00 8,000 0
10,0 10,000 00
P %3,000
P %!,000
Sc$)d) 1:
ales Cost of sales: /ei''i' i've'tor* .ip)e't fro) .o)e office Goods available for sale E'di' i've'tor* Cost of sales Gross profit E=pe'ses Det profit
Branch A P<0,000
P18,000 0,000 $8,000 !1,000 %$,000 33,000 !%,000 P 8,000
Branch B P$%,000
P!6,000 68,000 $!,000 !$,000 6%,000 30,000 !0,000 P10,000
3
3$
