CHAPTER 8 SUGGESTED ANSWERS EXERCISES Exercise 8 - 1 (a) (b) (c) (d) (e) (f)
Working Fund - Agency Cash
5,000 5,000
Accounts Receivable - Agency Sales - Agency
50,000
Cash Accounts Receivable - Agency
35,000
50,000 35,000
Expenses - Agency Cash
4,500
Expenses - Agency Cash
2,250
Cost of Sales - Agency Shipments to Agency
4,500 2,250 36,000 36,000
Exercise 8- 2 (a)
(b) (c) (d)
(e)
(f) (g)
Working Fund - Makati Agency Samples - Makati Agency Cash Shipments to Makati Agency
10,000 60,000 10,000 60,000
Accounts Receivable - Makati Agency Sales - Makati Agency
200,000
Cost of Sales - Makati Agency Shipments to Makati Agency
116,000
200,000 116,000
Salaries and Commission - Makati Agency Furniture and Fixtures - Makati Agency Cash
20,000 45,000
Delivery Expense - Makati Agency Office Supplies Expense - Makati Agency Cash
6,200 1,000
Samples Expense - Makati Agency Samples - Makati Agency Office Supplies - Makati Agency
65,000
7,200 25,000 25,000 300
AA1- Chapter 8 (2008 edition)
page 2
Office Supplies Expense (h) (I)
(j)
300
Depreciation Expense - Makati Agency Accumulated Depr. - Furniture & Fixtures Sales - Makati Agency Agency Income Cost of Sales - Makati Agency Salaries and Commission - Makati Agency Delivery Expense - Makati Agency Samples Expense - Makati Agency Office Supplies Expense - Makati Agency Depreciation Expense - Makati Agency Agency Income Income Summary
1,250 1,250 200,000 30,850 116,000 20,000 6,200 25,000 700 1,250 30,850 30,850
Exercise 8-3 Home Office Books (a) (b) (c) (d) (e) (f) (g) (h)
Cash Iloilo Branch
20,000 20,000
Iloilo Branch Cash
3,500
Expenses Iloilo Branch
1,200
3,500 1,200
Iloilo Branch Shipments to Iloilo Branch
32,000
Shipments to Iloilo Branch Iloilo Branch
15,000
32,000 15,000
Furniture and Fixtures Cash
5,500 5,500
Iloilo Branch Accumulated Depr. - Furniture & Fixtures Branch Income Branch
550 550 2,600 2,600
Branch Office Books
AA1- Chapter 8 (2008 edition)
(a)
Home Office
page 3
20,000
AA1- Chapter 8 (2008 edition)
page 4
Cash (b) (c) (d) (e)
Expenses Home office
3,500
Home Office Cash
1,200
3,500 1,200
Shipments from Home Office Home Office
32,000
Home Office Shipments from Home Office
15,000
(f)
Memo entry
(g)
Depreciation Expense Home Office
(h)
20,000
32,000 15,000
550 550
Home Office Income Summary
2,600 2,600
Exercise 8-4 Home Office Books (a) (1) (5)
Dagupan Branch Shipments to Branch
300,000
Cash Dagupan Branch
150,000
300,000 150,000 Branch Office Books
(1) (2) (3)
(4)
(5)
Shipments from Home Office Home Office
300,000
Accounts Receivable Sales
390,000
Expenses Cash Accrued Expenses
74,000
300,000 390,000 72,000 2,000
Cash Sales Discount Accounts Receivable
288,000 6,000
Home Office Cash
150,000
294,000 150,000
AA1- Chapter 8 (2008 edition)
(6) (7)
page 5
Furniture and Fixtures Cash
40,000 40,000
Expenses Accumulated Depr. - Furniture & Fixtures
8,000 8,000
(b) Merchandise Inventory Sales Shipments from Home Office Expenses Sales Discounts Income Summary
60,000 390,000 300,000 82,000 6,000 62,000
Income Summary Home Office
62,000 62,000
(c) Honda Sales, Inc. Statement of Recognized Income and Expenses - Branch For the Year Ended December 31,2008 Sales Less: Sales Discount Cost of sales: Shipment to Home Office Less: Inventory, end 240,000 Gross Profit Expenses 82,000 Net Profit (d)
P 390,000 6,000
P384,000
P 300,000 60,000 P 144,000 P 62,000 Honda Sales, Inc. Statement of Financial Position - Branch December 31,2008 Assets
Cash (-720,00 + 288,000 - 150,000 - 40,000) Accounts Receivable (390,000 – 294,000) Merchandise Inventory Furniture and Fixture Less: Accumulated Depreciation Total Assets
P 26,000 96,000 60,000 P
40,000 8,000
32,000 P 214,000
Liabilities Accrued Expenses Home Office (300,000 - 150,000 + 62,000) Total Liabilities 214,000
P P
2,000 212,000
AA1- Chapter 8 (2008 edition)
page 6
Exercise 8- 5 Home Office Books (a) (b) (c) (d)
(a) (b) (c) (d)
Furniture and Fixtures Branch
24,500
Branch Cash
24,500
24,500 24,500
Branch Accumulated Depr. - Furniture & Fixtures Furniture & Fixtures - new Accumulated Depr. - Furniture & Fixtures Branch Income Furniture & Fixtures - old Cash Branch Office Books
2,450 2,450 40,000 2,450 7,050 24,500 25,000
Home Office Accounts Payable
24,500
Accounts Payable Home Office
24,500
Depreciation Expense Home Office
24,500 24,500 2,450 2,450
Memo entry
Exercise 8-6 Jan.
10 10 16
16 20 25
Notes Payable Home Office Furniture and Fixtures Home Office
2,500 2,500 10,000 10,000
Shipments from Home Office Home Office
6,500
Home Office Cash
2,000
Home Office Shipments from Home Office
1,200
Home Office Accounts Receivable
6,500
2,000 1,200 150 150
AA1- Chapter 8 (2008 edition)
30 31
page 7
Expenses Home office
800
Home Office Income Summary
750
800 750
Exercise 8 -7 Honda Company Reconciliation of Home Office and Branch Accounts December 31,2008 HO Books Unadjusted balances Adjustments; (a) Merchandise in transit (b) Collection of home office accounts rec’l (c) Error in recording the net income of branch (P1,215 - P1,125) (d) Merchandise returned by branch still in transit Adjusted balances
Branch Books HO Acct. P 9,735
Branch Acct. P 8,400
615 2,500 90 ( 640) P 10,350
_______ P 10,350
Requirement 2 Home Office Books (b) (c) (d)
Branch Accounts Receivable
2,500 2,500
Branch Branch Income
90 90
Shipments to Branch Branch
640 640 Branch Books
(a)
Shipments from Home Office Home Office Exercise 8-8
615 615 Home Office Books
(a) (b) (c)
Allowance for Doubtful Accounts Makati Branch
600 600
Makati Branch General and Administrative Expense
1,250
Manila Branch Makati Branch
1,200
1,250 1,200
AA1- Chapter 8 (2008 edition)
(d)
page 8
Makati Branch Allowance for Uncollectible Accounts
850 850
Branch Books (a) (b)
Home Office Accounts Receivable
600 600
General and Administrative Expenses Home Office
(c)
No entry
(d)
Uncollectible Accounts Expense Home office
1,250 1,250
850 850
PROBLEMS Problem 8-1 (a)
(b) (c)
(d)
(e)
(f)
Samples - Cebu Agency Advertising Materials - Cebu Agency Shipments to Cebu Agency Advertising Materials
60,000 35,000
Working Fund - Cebu Agency Cash
30,000
60,000 35,000 30,000
Accounts Receivable - Cebu Agency Sales - Cebu Agency
330,000
Cost of Sales - Cebu Agency Shipments to Cebu Agency
250,000
Cash Sales Discounts - Cebu Agency Accounts Receivable - Cebu Agency
245,000 5,000
330,000 250,000
250,000
Rent Expense - Cebu Agency Delivery Expense - Cebu Agency Repairs and Maintenance - Cebu Agency Cash
15,000 3,000 2,200
Salaries and Wages - Cebu Agency Commission Expense - Cebu Agency Salaries and Wages Commission Expense
10,200 33,000
20,200
10,200 33,000
AA1- Chapter 8 (2008 edition)
(g) (g) (h)
(I)
page 9
Samples Expense - Cebu Agency Samples - Cebu Agency
15,000
Advertising Materials Expense - Cebu Agency Advertising Materials - Cebu Agency
10,500
15,000
Sales - Cebu Agency Agency Income Cost of Sales - Cebu Agency Sales Discounts - Cebu Agency Rent Expense - Cebu Agency Delivery Expense - Cebu Agency Repairs and Maintenance - Cebu Agency Salaries and Wages - Cebu Agency Commission Expense - Cebu Agency Samples Expense - Cebu Agency Advertising Materials Expense - Cebu Agency Income Summary Agency Income
10,500 330,000 13,900 250,000 5,000 15,000 3,000 2,200 10,200 33,000 15,000 10,500 13,900 13,900
Problem 8- 2 Home Office Books (a) (b)
Branch Cash
No entry
(d)
Branch Cash Equipment Gain on Transfer of Equipment No entry
(f)
150,000
Branch Shipments to Branch
(c)
(e)
150,000 90,000 90,000
90,000 3,000 75,000 12,000
Expenses Cash
(g)
and (h) no entry
(I)
Cash Branch
7,500 7,500
52,500 52,500 Branch Books
(a)
Cash Home Office
150,000 150,000
AA1- Chapter 8 (2008 edition)
(b) (c) (d) (e)
Shipments from Home Office Home Office Purchases Cash Equipment Home Office
page 10
90,000 90,000 120,000 120,000 90,000 90,000
Accounts Receivable Sales
250,000
Cash Accounts Receivable
100,000
250,000 100,000
(f)
No entry
(g)
Depreciation Expense - Equipment Accumulated Depr. - Equipment
9,000
Selling and Administrative Expenses Cash
45,000
Home Office Cash
52,500
(h) (I)
9,000 45,000 52,500
Problem 8-3 Requirement 1 a. b. c. d. e. f. g.
Accounts Receivable Sales
80,000
Purchases Accounts Payable
21,000
Shipments from Home Office Home office
40,000
Cash Accounts Receivable
76,000
Accounts Payable Cash
20,200
Allowance for Uncollectible Accounts Accounts Receivable Home Office Cash
80,000 21,000 40,000 76,000 20,200 1,200 1,200 30,000 30,000
AA1- Chapter 8 (2008 edition)
h. I. j.
k.
l.
page 11
Expenses Cash
24,800 24,800
Expenses Home Office
1,600
Prepaid Expenses Accrued Expenses Expenses Allowance for Doubtful Accounts Accumulated Depreciation
200 400 1,700
1,600
Merchandise Inventory, end Sales Income Summary Merchandise Inventory, beg. Shipments from Home Office Purchases Expenses Home Office Income Summary
1,100 1,200 38,800 80,000 3,300 33,000 40,000 21,000 28,100 3,300 3,300
Requirement 2 Volvo Company Statement of Recognized Income and Expenses - Branch For the Year Ended December 31, 2008 Sales Cost of goods sold: Inventory, January 1 Purchases Shipments from home office Cost of goods available for sale Less Inventory, December 31 Gross profit Operating expenses Net loss Volvo Company Statement of Financial Position - Branch December 31, 2008
P80,000 P33,000 21,000 40,000 P94,000 38,800
55,200 P24,800 28,100 P 3,300
AA1- Chapter 8 (2008 edition)
page 12
Assets Cash (7,000 + 76,000 + 20,200 - 30,000 - 24,800) Accounts Receivable (24,400 + 80,000 - 76,000 -1,200) Less Allowance for Uncollectible Accounts Merchandise Inventory Prepaid Expenses Furniture and Fixtures Less Accumulated Depreciation Total Assets Liabilities
P 8,000 P27,200 1,600 P 7,700 6,600
Accounts Payable (4,000 + 21,000 - 20,200) Accrued Expenses Home Office (60,500 + 40,000 - 30,000 + 1,600 - 3,300) Total Liabilities
25,600 38,800 900 1,100 P74,400 P 4,800 800 68,800 P74,400
Volvo Company Statement of Changes in Home Office Account For the Year Ended December 31, 2008 Home office account balance, January 1 Add: Shipments from home office Expenses paid by home office Total Deduct: Remittance to home office Net loss Home office account balance, December 31 Requirement 3 c. g. i.
P 60,500 P 40,000 1,600 P 30,000 3,300
Davao Branch Shipments to Branch
40,000
Cash Davao Branch
30,000 30,000
Davao Branch Cash
1,600 1,600 3,300 3,300
Problem 8-4 Requirement 1 Branch Books Cash Shipments from Home Office Accounts Receivable
33,300 P 68,800
40,000
Branch Income Davao Branch
a.
41,600 P102,100
15,000 102,000 26,000
AA1- Chapter 8 (2008 edition)
page 13
Home Office
143,000
Home Office Cash b. c. d. e. f. g.
h. I.
9,000 9,000
Accounts Receivable Sales
62,000
Cash Accounts Receivable
26,000
Purchases Accounts Payable
30,000
Accounts Payable Cash
14,500
Expenses Cash
12,500
Cash Home Office Accounts Receivable
16,000 1,500
Shipments from Home Office Home Office
12,500
Home Office Cash
10,000
62,000 26,000 30,000 14,500 12,500
17,500 12,500 10,000 Home Office Books
a.
Bacolod Branch Cash Shipments to Branch Accounts Receivable Store Furniture and Fixtures Bacolod Branch
b. c. d. e.
143,000 15,000 102,000 26,000 9,000 9,000
Accounts Receivable Sales
346,000
Cash Accounts Receivable
400,000
Purchases Accounts Payable
316,000
Accounts Payable
362,000
346,000 400,000 316,000
AA1- Chapter 8 (2008 edition)
page 14
Cash f.
g. h. I.
362,000
Expenses Accrued Expenses Cash
89,500 2,500 92,000
Allowance for Uncollectible Accounts Bacolod Branch
1,500 1,500
Bacolod Branch Shipments to Branch
12,500
Cash Bacolod Branch
10,000
12,500 10,000
Requirement 2 Jazz Company Statement of Recognized Income and Expenses - Bacolod Branch For the Month Ended January 31, 2008 Sales Cost of goods Sold: Shipments from Home Office (102,000 + 12,500 + 6,000) Purchases Cost of Goods Available for Sale Less Merchandise Inventory, December 31 (9,800 + 600) Gross Profit Expenses (12,500 + 4,750 + 350+ 3,500) Net Loss
P 62,000 P120,500 30,000 P150,500 104,000
46,500 P 15,500 21,100 P 5,600
Jazz Company Statement of Financial Position - Bacolod Branch January 31, 2008 Assets Cash (15,000 - 9,000 + 26,000 - 14,500 - 12,500 + 16,000 - 10,000) Accounts Receivable (62,000 + 26,000 - 26,000 – 17,500) Merchandise Inventory (98,000 + 6,000) Total Assets Liabilities Accounts Payable (30,000 - 14,500) Accrued Expenses
P 11,000 44,500 104,000 P159,500 P 15,500 3,500
AA1- Chapter 8 (2008 edition)
page 15
Home Office (143,000-9,000-1,500+12,500-10,000+6,000+4,750+350 -5,600) Total Liabilities
140,500 P159,500
Jazz Company Statement of Recognized Income and Expenses - Home Office For the Month Ended January 31, 2008 Sales Cost of Goods Sold: Merchandise Inventory, January 1 Purchases Cost of Goods Available for Sale Less Shipments to Branch (102,000 + 12,500 + 6,000) Cost of Goods Available for Own Sale Less Merchandise Inventory, December 31 Gross Profit Expenses (89,500 - 4,750 + 1,000 + 7,500) Net Income from Own Operations Less Branch Net Loss Net profit Income Tax Net Profit
P346,000 P460,000 316,000 P776,000 120,500 P655,500 445,000
210,500 P135,500 93,250 P 42,250 5,600 P 36,650 12,828 P23,822
Jazz Company Statement of Financial Position - Home Office January 31, 2008 Assets Cash (150,000 - 15,000 + 400,000 – 362,000 - 92,000 + 10,000) Accounts Receivable (420,000 - 26,000 + 346,000 - 400,000) Less Allowance for Uncollectible Accounts (12,000 - 1,500) Merchandise Inventory Branch (143,000 - 9,000 - 1,500 + 12,500 - 10,000 + 6,000 + 4,750+ 350 - 5,600) Store Furniture and Fixtures (150,000 + 9,000) Less Accumulated Depreciation (46,000 + 1,350) Total Assets
P 91,000 P340,000 10,500
329,500 445,000 140,500
P159,000 47,350
111,650 P1,117,650
Liabilities and Shareholders’ Equity Accounts Payable (337,500 + 316,000 - 362,000) Accrued Expenses Income Tax Payable Ordinary Share Capital (282,000 + 36,650) Retained Earnings (282,000 + 23,822 Total Liabilities and Shareholders’ Equity
P 291,500 7,500 12,828 500,000 305,822 P1,117,650
Requirement 3 Jazz Company Combined Statement of Recognized Income and Expenses for Home Office and Branch For the Month Ended January 31, 2008
AA1- Chapter 8 (2008 edition)
page 16
Sales Cost of Goods Sold: Merchandise Inventory, January 1 Purchases Cost of Goods Available for Sale Less Merchandise Inventory, December 31 Gross Profit Expenses Net Profit Income Tax Net profit
P408,000 P460,000 346,000 P806,000 549,000
257,000 P151,000 114,350 P 36,650 12,828 P 23,822
Jazz Company Combined Statement of Financial Position for Home Office and Branch January 31, 2008 Assets Cash Accounts Receivable Less Allowance for Uncollectible Accounts Merchandise Inventory Store Furniture and Fixtures Less Accumulated Depreciation Total Assets
P 102,000 P384,500 10,500 P159,000 47,350
374,000 549,000 111,650 P1,136,650
Liabilities and Shareholders’ Equity Accounts Payable Accrued Expenses Income Tax Payable Ordinary Share Capital Retained Earnings Total Liabilities and Shareholders’ Equity
P 307,000 11,000 12,828 500,000 305,822 P1,136,650
Requirement 4 Branch Books a. b.
Shipments from Home Office Home Office
6,000
Expenses
4,750
6,000
AA1- Chapter 8 (2008 edition)
page 17
Home Office c.
d. e.
4,750
Expenses Home Office P22,500 + P9,000 = P31,500/7.5 yrs x 1/12 Expenses Accrued Expenses
350 350 3,500 3,500
Sales Merchandise Inventory, end Income Summary Shipments from Home Office
62,000 104,000 5,600 120,500 30,000 21,100
Purchases Expenses f.
Home Office Income Summary
5,600 5,600 Home Office Books
a. b. c.
d. e. f.
Bacolod Branch Shipments to Branch
6,000
Bacolod Branch Expenses
4,750
Expenses Bacolod Branch Accumulated Depreciation ( 150,000 - 30,000 = 120,000 x 10% x 1/12 = 1,000 ) Expenses Accrued Expenses
1,000 350
Branch Income Bacolod Branch
5,600
Sales Shipments to Branch Merchandise Inventory, end Income Summary Merchandise Inventory, beg. Purchases Expenses Branch Income
6,000 4,750
1,350 7,500 7,500 5,600 346,000 120,500 445,000 36,650 460,000 316,000 93,250 5,600
Income Tax Income Tax Payable
12,828
Income Summary
12,828
12,828
AA1- Chapter 8 (2008 edition)
page 18
Income Tax g.
12,828
Income Summary Retained Earnings
23,822 23,822
Problem 8-5 Requirement 1 Feroza Company Working Paper for Combined Financial Statement For the Year Ended December 31,2008
Debits Cash NR AR Inventories F&E Branch Cur. CGS OE Credits AP CS HO Cur. RE Sales
HO 63,000 10,500 120,600 143,700 72,150 124,050
BR 21,900
300,750 104,250 939,000
128,700 32,850 275,700
Adjustments Eliminations Dr. Cr.
Combined Income Statement Dr. Cr.
55,950 36,300 a.124,050 429,450 137,100
61,500 300,000
61,500 300,000 124,050
37,500 540,000 939,000
Net Profit
a.124,050 37,500
151,650 275,700
124,050
124,050
566,550 125,100 691,650
691,650 691,650 691,650
Requirement 2 a.
Combined Balance Sheet Dr. Cr. 84,900 10,500 176,550 180,000 72,150
Sales Income Summary
151,650 9,900
524,100
125,100 524,100
AA1- Chapter 8 (2008 edition)
page 19
Cost of Goods Sold Operating Expenses b.
128,700 32,850
Home Office Income Summary
9,900 9,900
Requirement 3 a. b.
Branch Income Branch
9,900
Income Summary Branch Income
9,900
9,900 9,900
Problem 8-6 Requirement 1 Isuzu Company Reconciliation of Home Office and Branch Accounts January 31, 2008
Unadjusted balances Add (deduct); Advertising expense charged to branch Merchandise shipment in transit Merchandise shipment for P16,560 recorded as P16,650 Collection of home office account Understatement of 1994 depreciation Remittance to home office in transit Adjusted balances
Home Office Books Branch Acct. P77,150
Branch Books Home Office Acct. P56,450 600 4,400 (
750 ( 540) (16,000) P61,360
90)
_______ P61,360
Requirement 2 Home Office Books a.
Cash Retained Earnings Accounts Receivable Iloilo Branch
16,000 540 750 15,790 Branch Books
a.
Advertising Expense Shipments from Home Office Home Office
600 4,310 4,910
AA1- Chapter 8 (2008 edition)
page 20
Problem 8-7 Requirement 1 a.
b.
c.
Shipments from Home Office Operating Expenses Home Office Current
57,600 8,100 65,700
Sales Merchandise Inventory, end Income Summary Merchandise Inventory, beg. Shipments from Home Office Operating Expenses
778,200 122,180
Income Summary Home Office Current
116,990
116,990 47,800 680,800 54,790 116,990
Requirement 2 a. b. c.
Freight-Out Branch Current
470
Cash Branch Current
19,200
Branch Current Branch Income
116,990
470 19,200 116,990
Requirement 3 Ford Company Reconciliation of Current Account December 31,2008
Balances before adjustment Shipment in transit Advertising charged to branch Rent charged to branch Error in charging freight Remittance in transit
Branch Acct. P 206,344
(470) (19,200) P 186,674
Home Office Acct. P120,974 57,600 4,200 3,900 P 186,674
AA1- Chapter 8 (2008 edition)
page 21
Problem 8-8 Mitsubishi Trading Company Reconciliation of Home Office and Branch Accounts December 31, 2008 Unadjusted balances Add (deduct): Error in recording cost of equipment Insurance premium recorded twice by branch Freight for P1,125 recorded as P1,215 Discount from home office not recorded Share of branch in advertising not recorded Error in recording remittance Adjusted balances
Branch Acct. P225,770
Home Office Acct. P220,485 3,150 675) 90) 800) 700 ________ P222,770 ( ( (
(
3,000) P222,770
Requirement 3 a.
Office Equipment Advertising Expense Insurance Expense Freight Discount from Home Office Home Office
3,150 700 675 90 800 2,285 MULTIPLE CHOICE
1.
B
2.
A
3.
A
Sales Cost of sales ( 400,0000 - 70,000) Gross profit Expenses [30,000 + 10,000 + (10,000 - 6,000) + 5,000] Net profit
4.
A
Sales Cost of sales w/o freight Add freight Cost of sales w/ freight
P400,000 330,000 70,000 49,000 P 21,000 P46,500 x 70% P32,550 1,100 P33,650
AA1- Chapter 8 (2008 edition)
5.
Sales Less Sales Discount (39,690 / 98%) - 39,690 Cost of sales Gross Profit Expenses: Selling Administrative (46,500 x 5%) Samples Expenses Net Profit
6.
page 22
P46,500 810
P 2,820 2,325 1,900
P45,690 33,650 P12,040
7,045 P 4,995
17,500 + 8,000 +9,250 + (50,000 x 60% x 1/6)
7.
C
Sales Cost of sales Gross Profit Expenses Net Income
8. 9.
D B
P 87,00 / 125% = Sales Cost of sales Gross Profit Expenses (350 + 250) Net Income
P70,000 P 87,500 70,000 P 17,500 6,000 P 11,500
10
A
11
C
12
B
13
A
Sales Cost of sales Shipments Less Inventory, end Gross Profit Expenses Net Profit
P74,000
14 15
A A
P17,500 + 8,680
16
D
203,500 – (186,120 – 25,245 – 18,755) = 23,870
17
D
Home Office Current Branch Income Correct branch account - current
P176,000 105,000 P 71,000 39,750 P 31,250
P67,680 9,180
58,500 P15,500 6,820 P 8,680 P 26,180
P 48,125 23,870 P 71,995
AA1- Chapter 8 (2008 edition)
18
B
Sales Cost of Sales: Shipments from home office Less Inventory, Dec. 31 Gross profit Expenses Net Profit
19
C
P90,000 + P14,400
20
A
P1,500 + 43,800 + 37,170
21
D
Net Sales (198,720 - 3,600) Cost of sales Beg. Inventory Shipments Goods available for sale End. Inventory Gross Profit Expenses (57,930 + 1,920) Net Profit
22
C Balances before adjustment Adjustments: 1. Shipments in transit 2. HO AR collected by branch 3. Supplies returned 4. Error in recording Br. net income 5. Cash to Branch in transit
23
D
24
C Balances Error in recording allowance Advances taken by Pres. Share in advertising expense
page 23
P112,500 P120,000 30,000
90,000 P 22,500 8,100 P 14,400 P104,400 P 82,470 P 195,120
P 37,170 136,000 P 173,170 41,370
131,800 P 63,320 59,850 P 3,470
BR. Acct. HO Acct. P150,000 P117,420 37,500 10,500 (4,500) (1,080) 25,000 25,000 P179,920 P 179,920 P 179,920 BR Acct. P43,500
HO. Acct. P41,900 60
(550) P42,950
25
A
Sales Cost of sales Inventory, beg. Merchandise from Home Office Merchandise available for sale Less Inventory, end Gross profit Operating Expenses Net profit of Branch A
900 P42,950 P 100,000
P21,000 61,000 P82,000 19,000
63,000 P37,000 21,000 P16,000
AA1- Chapter 8 (2008 edition)
26
C Imprest branch fund Accounts Receivable, Jan.1 Inventory, Jan.1 Home Office account
page 24
Branch A P 2,000 55,000 21,000 P 78,000
Branch B P 1,500 43,500 19,000 P 64,000
27
B
28
C
Imprest branch fund Accounts Receivable, Dec. 31 Inventory, Dec. 31 Balance of Branch account - current
P 1,500 53,000 12,000 P 67,000
29
D
Sales Cost of sales Inventory, Jan.1 Merchandise from Home office Merchandise available for sale Less Inventory, Dec.31 Gross profit Operating Expenses Net profit of Branch B
P 80,000
30
D
P 19,000 47,000 P 66,000 12,000
HO Account. Beg. Balances 1. Branch remittances 2. Shipment to branch 3. Home office expense paid by branch 4. Branch receivable collected by branch
P
30,670 (55,000) 138,000 (5,700)
P 107,970 31
D Unadjusted balances 1. Remittance in transit 2. Shipment in transit 3. Home office expense paid by branch 4. Branch receivable collected by branch 5. Branch net profit
Branch Acct. P 133,970 (7,200)
54,000 P 26,000 14,300 P 11,700 Branch Acct. P 30,670 (47,800) 160,000 (8,900) P 133,970 HO Acct. P 107,970 22,000
(5,700) 6,500 P 127,570
(8,900) 6,500 P 127,570
32
A
Marketing Expense of another branch charged to Butuan Butuan’s remittance credited to Davao Net adjustment in Home Office Banch account
P (10,000) ( 65,700) P (75,700)
33
C
Fixed account not recorded by Butuan Inventory transfer recorded twice by Butuan Error in recording debit memo
P (53,960) 75,000 ( 90)
4,650
AA1- Chapter 8 (2008 edition)
page 25
Net adjustment in Branch Books 34
20,950
D. Unadjusted balances
35
P
B.
Net adjustment in Branch Account Adjusted balances
Branch Account P165,920
Home Office Account P111,170
(75,700) P 90,220
(20,950) P 90,220
