Chapter 12 Problem I (a)W (a)Wor orki king ng Fund Fund – Agen Agency cy …………… ………………… ………… ………… ………… ………… ………… ………… ………… …….. .. 5,00 5,000 0 Cash …… …………………………………………………………………………. 5,000 (b)Accounts (b)Accounts Receivable ……………………………… …………………………………..... …............. ................. .................. ............... ...... 50,000 50,000 Sales-Agency ………………………………………………………………. 50,000 (c)Cash (c)Cash ………………………… ……………………………………… ……………………… ………………... ……........... ................. ................. ................ .......... 35,000 35,000 Accounts Re Receivable …… …………………………………………………….. 35,000 (d)Exp (d)Expen ense ses-A s-Age genc ncy y …… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… …….. .. Cash …… ………………………………………………………………………….
4,50 4,500 0
(e)E (e)Expe xpens nses es-A -Age genc ncy y …… ………… ………… ………… …………… …………… ………… ………… ………… ………… ………… ………. …... Cash …… ………………………………………………………………………….
2,25 2,250 0
(f)Cos (f)Costt of Goods Sold-A Sold-Agen gency cy ……………… ……………………… ……………… ……………… ……………… …………… …… Merchandise Shipments-Agency ……………………………………….
36,000 36,000
4,500
2,250
36,000
Problem II (a) Branch Branch Book Books: s: (a) (a) Cash Cash …… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… …….. .. Home Office ……………………………………………
42,5 42,500 00
(b) (b) Ship Shipme ment ntss fro from m Hom Home e Off Offic ice e ……… …………… ………… ………… ………… …… Home Office …………………………………………...
50,2 50,200 00
(c) (c) Acco Accoun unts ts Rece Receiv ivab able le …… ………… ………… ………… ………… ………… ………… …….. Sales ……………………………………………………..
60,0 60,000 00
(d) (d) Purc Purcha hase sess …… ………… ………… ………… ………… ………… ………… ………… ………… ………… …… Accounts Payable ……………………………………
22,5 22,500 00
(e) (e) Home Home Off Offic ice e ……… …………… ………… ……… ……… ……… ……… ………… ……… ……… …….. .. Accounts Receivable …………………………..
53,40 3,400 0
(f) (f) Accou ccount ntss Pay Payab able le …… ……… ……… ………… ……… ……… ……… ………… ………. …... .. Cash ……………………………………………………..
12,25 2,250 0
(g) (g) Furni urnitu ture re & Fix Fixtu ture ress ……… …………… ……… ……… ………… ……… ……… ……… ……… Cash ……………………………………………………..
8,00 8,000 0
(h) (h) Expe Expens nses es …… ………… ………… ………… ………… ………… ………… ………… ………… ………… …….. .. Cash ……………………………………………………..
18,0 18,000 00
42,500
50,200
60,000
22,500
53,400
12,250
8,000
18,000
(b) Home Home Office Office Books: Books: (a) (a) Bran Branc ch ……… …………… ……… ……… ………… ……… ……… ………… ……… ……… ……… ………. Cash …………………………………………………….
42,50 2,500 0 42,500
(b) (b) Bran Branc ch ……… ………… ……… ……… ………… ……… ……… ………… ……… ……… ……… ……… Shipments to Branch ……………………… ………..
50,20 0,200 0
(c) (c) Accou ccount ntss Rec Recei eiva vabl ble e ……… ………… ……… ……… ……… ……… ……… ………. …... .. Sales ……………………………………………………
105, 05,000 000
(d) Purchases ……………………………………………… ……… …. Accounts Payable ………………………………….
122,5 2,500
(e) Cash ash ……… ……… …………………………… ……… ……… ……… ………….. Accounts Receivable ………………………………
113,6 3,600
(f) Accou ccoun nts Pay Paya able ……… ………… …………………………… ……… …. Cash ……………………………………………………
124,0 4,000
(g) (g) Expe Expens nses es …… ………… ……… ……… ………… ……… ……… ……… ……… ……… ……… ……… …… Cash ……………………………………………………
26,60 6,600 0
(h) Cash ash ……… ……… …………………………… ……… ……… ……… ………….. Branch ………………………………………………...
53,400
(i) Retained Ear Earnings …… ………………………………………. Cash …………………………………………………...
10,000
50,200
105,000
122,500
113,600
124,000
26,600
53,400
10,000
BARTON CO. Balance Sheet for Branch December December 31, 20x4 Assets
Liabilities
Cash …………………………… Accounts Receivable ……… Merchandise Inv……………... Prepaid Expenses …………… Furnitures & Fixtures …. P 8,000 Less accum. Depr …… 6 50 Total Assets ……………………
P 4,250 12,600 23,500 750 7,350 P48,450
Accounts Payable ………… P 10,250 Accrued Expenses …… …………… 300 Home Office ………………….. 37,900
Total Liabilities ………………….P48,450
BARTON CO. Income Statement for Branch For Year Ended December 31, 19X6 Sales …………………………………………………………………………… Cost of Goods Sold: Purchases …………………………………………………………… Shipments for home office ………………………………………. Merchandise av available fo for sa sale …… ………………………………… Less me merchandise in inv, De December 31 31 …… ………………………….. Cost of Goods Sold ……………………………………………….. Gross Profit …………………………………………………………………….
P66,000 P22,500 50,200 P72,700 23,500 49,200 P16,800
Expenses ……………………………………………………………………… Net loss ………………………………………………………………………...
18,200 P 1,400
BARTON CO. Income Statement for Branch For Year Ended Ended December December 31, 20x4 Assets Cash …………………………….. Accounts Receivable ……….. Merchandise Inventory……… Prepaid Expenses ……………. Furniture & Fixtures …. P 20,000 Less accum. Depr….. 5,580 Branch ………………………… Total Assets …………………...
Liabilities & Stockholders Equity P 23,200 19,050 48,500 2,050 14,420 37,900 P145,120
Liabilities Accounts payable ………… P 21,300 Accrued Expenses …………. 1,350 Stockholders Equity Capital stock, P20 par……… P50,000 Retained Earnings …………. 72,740 Total liabilities and stockholders’ equity …………………
P22,650
122,470 P145,120
BARTON CO. Income Statement for Home Office For Year Ended Ended December December 31, 20x4 Sales ……………………………………………………………………………....... Cost of goods sold: Merc Mercha hand ndis ise e inve invent ntor ory, y, Janu Januar ary y 1 …… ………… ………… ………… ………… ………… ………. …. Purc Purcha hasses …… ……… ………… ……… ……… ……… ……… ……… ……… ……… ……… ………… ……… ……… ………. …... .. Merc Mercha hand ndis ise e avail availab able le for for sale sale …… ………… ………… ………… ………… ………… ………… ……… … Les Less ship shipme men nts to bran branc ch …… ………… ……… ……… ……… ………… ……… ……… ……… ……… …….... Merc Mercha hand ndis ise e avail availab able le for for own sale sale …… ………… ………… ………… ………… ………… …….. .. Les Less merc mercha hand ndis ise e inve invent ntor ory, y, Dec Decembe emberr 31 …… ………… ……… ……… ……… ……. Cost of Goods Sold ……………………………………………………. Gross Profit ………………………………………………………………………… Expenses …………………………………………………………………………… Net income from own operati ons …………………………………………….. Deduct branch net loss …………………………………………………………. Total Income ……………………………………………………………………….
P105,000 P 40,1 40,120 20 122, 22,500 500 P162 P162,6 ,620 20 50, 50,200 200 P112 P112,4 ,420 20 48, 48,500 500 63,920 P 41,080 27,630 P 13,450 1,400 P 12 12,050
BARTON CO. Income Statement for Home Office For Year Ended Ended December December 31, 20x4 Sales …………………………………………………………………………………. Cost of goods sold: Merc Mercha hand ndis ise e inve invent ntor ory, y, Ja Janu nuar ary y 1 ……… …………… ………… ………… ………… ………… …….. .. Purc Purcha hasses …… ……… ………… ……… ……… ……… ……… ……… ……… ……… ……… ………… ……… ……… ……… …… Merc Mercha hand ndis ise e avail availab able le for for sale sale …… ………… ………… ………… ………… ………… ………… ……… … Les Less mer merc chand handis ise e inv inven ento tory ry,, Dec Decem embe berr 31 31 ………… ……………… ………… ………. …... Cost of goods sold ………………………………………………………. Gross profit ………………………………………………………………………….. Expenses … …… ………………………………………………………………………….. Net Income ………………………………………………………………………….
P171,000 P 40,1 40,120 20 145, 45,000 000 P185 P185,1 ,120 20 72, 72,000 000 113,120 P 57 57,880 45,830 P 12 12,050
(a) Branch Branch Book Books: s: Expenses ………………………………………………………………. Accumulated Depreciation – F& F&F……………………….
650
Sales …………………………………………………………………… Merchandise Inventor tory …………………………… ……… ……… ……… ………. Income summary …………………………………………..
66,000 23,50 ,500
Income Su Summary …… …………………………………………………… Shipments from Home Office …………………………… Purchases …………………………………………………… Expenses ……………………………………………………..
90,900
Home Of Office …… ………………………………………………………… Income Summary …………………………………………
650
89,500
50,200 22,500 18,200 1,400 1,400
(b) (b) Home Home Off Offic ice e Books Books Expenses ………………………………………………………………. Accumulated Depreciation – F& F&F……………………….
1,180
Sales …………………………………………………………………… Merchandise Inventory …………………………………………… …….. Shipments to Branch ……………………………………………….. Income su summary ………………………………………….. Income Su Summary …… …………………………………………………… Merchandise Inventory …………………………………… Purchases ……………………………………………………. Expenses ……………………………………………………..
105,000 48,500 50,200
Branch Income ……………………………………………………… Branch ……………………………………………………….
1,400
1,180
203,700 190,250 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 (a) Branch Branch Books: Books: Jan.
1
1
Cash …………………………………………. Home Office ………………………
1,500
Shipments from home office ……………. Home Office ………………………
10,200
1,500
10,200
1
1
1-31
1-31
1-31
1-31
1-31
Jan.
1-31
1-31
Home Office ……………………………….. Cash ………………………………..
900
Accts. Rec. – Home office ………………. Home Office ………………………
2,600
Accts. Re Rec.-Home Of Office …… ………………. Sales ………………………………..
6,200
Cash ……………………………………….. Accounts Receivable …………..
2,600
Purchases …… …………………………………. Accounts Payable ………………
3,000
Accounts Pa Payable …… ………………………. Cash ………………………………..
1,450
Expenses …… ………………………………….. Cash ……………………………….
1,250
Cash ………………………………………… Accts. Rec.-Home Office ……...
1,600
90 0
2,600
6,200
2,600
3,000
1,450
1,250
1,600
Home Office ……………………………… Accts. Rec.-Home Office …….
150
Shipments from Home Office ………… Home Office …………………….
1,250
Home Office ……………………………… Cash ……………………………… (b) Home Home Office Office Books: Books:
1,000
1-31
1-31
Jan.
1 1
1
150
1,250
1,000
Branch …………………………………….. 1,500 Cash ……………………………… Branch …… …………………………………….. 10 10,200 Shipments to Branch …………..
10,200
Stor tore Fur Furniture and and Fixtu xtures res Branch …. …... 3,000 Store Furniture and Fixtures …...
3,000
1,500
1
Accumulated Depr. Store F&F ……….. 750 Accumulated Depr. Store Furniture And Fixtures, Branch ………….. 750 Calculation of depreciation: 2.5years at P300, (10% of P3,000), or P750
1
Stor tore Fur Furniture and and Fixtu xtures res Bra Branch ….. Branch ……………………………
1
900
Branch …… …………………………………… 2,600 Accounts Receivable ….........
900
2 ,6 0 0
1-31 1-31
1-31 1-31
1-31 1-31
1-31 1-31
1-31 1-31
1-31
1-31
1-31 1-31
Acco Accoun unts ts Rece Receiv ivab able le ……………… ………………… … 34,6 34,600 00 Sales …… ………................................
34,600
Cash Cash …… ………… ………… ………… ………… ………… ………… ………. …. 40,0 40,000 00 Accounts Receivable …………
40,000
Purc Purcha hase sess …… ………… ………… ………… ………… ………… ………. ….31 31,6 ,600 00 Accounts Receivable ………….
31,600
Acco Accoun unts ts Paya Payabl ble e …… ………… ………… ………… ……… … 36,2 36,200 00 Cash ……………………………...
36,200
Accr Accrue ued d Expe Expens nses es Paya Payabl ble e …… ………… …….. Expen Expense sess ……… …………… ………… ………… ………… ………… …….. Cash ……………………………..
250 250 8,95 8,950 0
Allowance for Doubtful Accounts ….. Branch …………………………..
150
Branch …… ……………………………………. Shipments to Branch …………
1,250
Cash Cash …… ………… ………… ………… ………… ………… ………… ……… … Branch ………………………….
1,00 1,000 0
9,200
150
1,250
1,000
EAGLE CO. Balance Sheet January January 31, 20x4 Assets
Liabilities
Cash …………............................ Accounts Receivable ………….. Accts. Rec.-home office ………. Merchandise Inventory ………… Merchandise in Transit …………. Total assets …………………
P 1,100 3,600 8 50 9,800 6 00 P37,200
Accounts Payable ………………. P 2,400 Accrued expenses ………………. 4 00 Home Office ……………………… 14,050
Total Liabilities ……………………. P37,200
EAGLE CO. Income Statement for Branch For Month Month Ended Ended January January 31, 20x 20x4 4 Sale Saless ……… …………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………. …. Cost of Goods Sold: Purchases …… …………………………………………………… P 3, 3,000 Shipments fr from ho home of office …… ……………………………. 11,450 Shipments from home office in transit ………….......... 6 00 Merchandise Availab ablle for Sale ……… ……… ………………. …... P15,050 Less merchandise inv. Dec 31, 19X9 ……................P9,800
P 6,2 6,200 00
Merc Mercha hand ndis ise e in tran transi sitt …… ………… ………… ………… ………… …….. .. 600 600 10,4 10,400 00 Cost of of Go Goods So Sold …… ……………………………………………………………. Gros Grosss Pro Profit fit ………… …………… ……… ……… ……… ……… ……… ……… ……… ……… ……… ……… ………… ……… ……… ……… ……… ……… …… Exp Expenses ……………………………… ……… ……… ……… …………………………………………… Net Net Los Loss …… ……… ……… ……… ……… ………… ………… ……… ………… ……… ……… ……… ……… ……… ……… ……… ……… ………… ………. …... ..
4 ,6 5 0 P 1,5 1,550 2,110 P 560 560
EAGLE CO. Balance Sheet for Home Office January 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 fixtures-branch ……………………………… ……………………………… P 3,900 Less accumulated depreciation ……………………… 785 Branch office ………………………………………………………... Total Assets ……………………………………………………………
P 9,100 32,950 44,500 8,050 3 ,3 1 5 14,050 P111,765
Liabilities Accounts Payable …………………………………………….. P29,150 Accrued Expenses …………………………………………….. 750 Total Liabilities ………………………………………………….. Stockholders Equity Capital Stock …………………………………… …………………………………………………… ……………… P50,000 Retained earnings …………………………………………….. 31,865 Total stockholder’s equity …………………………………… Total liabilities and stockholders equity ……………………
P29,900
81,865 P111,765
EAGLE CO. Income Statement for Home Office For Month Month Ended January January 31, 20x4 Sales ……………………………………………………………………………… Cost of goods sold: Merchandise in inventory, Ja 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 me merchandise in inventory, Ja January 31 31 …… ……………… 44,500 Cost of goods sold …………………………………………………………… Gross oss Profit ………………………………………………………………………… Expenses …………………………………………………………………………… Net income from own oper peratio tions …… ……… …………………………… ……… ……… ……… …. Deduct branch net loss ………………………………………………………… Total Income ……………………………………………………………………
P 34,600
21,050 P 13,6 3,650 9,325 P 4,225 560 P 3,665
EAGLE CO. Income Statement for Home Office For Month Month Ended Ended January January 31, 20x 20x4 4 Assets Liabiities and Stockholders Equity Liabilities Cash ash …… ……… ……… ………… ……… ……… ………. …..…… .………. …. P 10,20 0,200 0 Accou ccount ntss Payab ayable le …… P30,7 30,700 00 Accounts receivable ……….. P38,450 Accrued Expenses …… 1,100 P 31,800 Less allow for doubtFul Ful acco accou unts nts …… ………. …... 1,05 1,050 0 37, 37,400 400 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 31,865 81,865 Tota Totall ass asset etss ……… …………… ………… ………… ………… ……… …P P11 113, 3,66 665 5 Tota Totall lia liab. b. And And sto stock ckho hold lder erss equi equity ty . P113 P113,6 ,665 65
EAGLE CO. Combined Income Statement for Home Office and Branch For Month Month Ended January January 31, 20x4 Sales …… ………………………………………………………………………………….. Cost of goods sold: Merc Mercha hand ndis ise e Inv Inven ento tory ry,, Jan Janua uary ry 1 ……… …………… ………. …. P46, P46,00 000 0 Purchases ases ……… ……… ……… ……… ……………………………... 34,600 Merc Mercha hand ndis ise e avai availa labl ble e for for sal sale e ………… ……………… ………. …... .. P80, P80,60 600 0 Les Less mer merc chand handis ise e inv inven ento tory ry,, Jan Jan 31 31 ……… …………… …….... 54,9 54,900 00 Cost of goods sold …………………… ……… ……………............................... Gross p prrofit …… …………………………………………………………………………... Expenses … …… …………………………………………………………………………… Net Income …………………………………………………………………………..
P 40 40,800
25,700 P 15 15,100 11,435 P 3,665
(a) Branch Branch Books Books Jan.
31
Shipments from Office-in Transit ……………… Home Office …………………………….
600 600
31
Expenses … …… ………………………………………. 475 Home Office ……………………………. 31 Expenses ………………………………………… 35 Home Office ………………………….. 1/120 x P3,000, or P25 (depreciation for one month; Asset life, 10 years); 1/90 x P900, or P10 (depreciation For one month; asset life, 7.5 years) 31
31
31
Merchandise Inventory ……………………… Merc Mercha hand ndis ise e in in Tra Trans nsit it ……… ……… ……… ……… ……… …….. .. Income Summary ……………………
475 35
9,800 600 600 10,400
Expenses ……………………………………….. Accrued Expenses ………………….
350
Sales …… …………………………………………….
6,200
350
Income Summary ………………….. 31
31
6,200
Income Summary ……………………………. Shipments from Home Office ……. Ship. From Home Office – in Trans . Purchases …………………………… Expenses ……………………………..
17,160
Home Office ………………………………….. Income Summary …………………...
560
11,450 60 0 3 ,0 0 0 2 ,1 1 0
560
(b) Home Home Office Office Books: Books: 31
31
31
31
31
31
31
31
31
31
31
Branch …………………………………………. Shipments to Branch ……………….
600
Branch …………………………………………. Expenses ……………………………...
475
Branch …………………………………………. Accumulated Depreciation, Store Furniture and Fixtures Branch ……..
35
600
475
35
Expenses … …… ……………………………………. 100 Accumulated Depreciation store Furniture and Fixtures branch ……. 1/120 x P12,000, or P100 (depreciation for one Month; asset life, 10 years) Income Summary …………………………… Merchandise Inventory ……………
46,000
Merchandise Inventory …………………….. Income Summary …………………..
44,500
Expenses … …… ……………………………………. Accrued Expenses ………………….
100
46,000
44,500 750 750
Sales …………………………………………… Purchases …………………………… Expenses ……………………………..
40,925
Branch Income ………………………………. Branch ………………………………..
560
Income Summary ……………………………. Branch Income ……………………...
560
Income Summary ……………………………. Retained Earnings …………………..
3 ,6 6 5
31,600 9,325
560
560
3,665
Problem IV 1. Socrates Socrates Company Company Home Office and Plato Branch Reconciliation of Reciprocal Ledger Accounts June 30, 20x4 Investment in Plato lato Bran Branch ch Ledger Account (Debit) Balances prior to adjustment P85,000 Add: Merchandise shipped to branch Less: Acquisition of office equipment by branch (carri (carried ed in in accou accountin nting g recor records ds of of home home office office)) (14,50 (14,500) 0) Collection of branch trade accounts receivable Payment of cash by branch (22,000) Adjusted balances P48,500 2.
(a) (a)
Acco Account untin ing g rreco ecord rdss of of hom home e off offic ice: e: Office Equipment: Plato Branch 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.
(b) (b)
Hom Home Offi Offic ce Ledger Account (Credit) P33,500 24,000
14,500 14,500
22,000 22,000
Acco Accoun unti ting ng reco record rdss of bran branch ch:: 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 …………………. Coll Collec ecti tion on of Home Home offi office ce rece receiv ivab able le by Bran Branch ch Understatement of of br branch ne net iin ncome fo for No Nov.. Deductions: Merchandise re return to to ho home of office in in tr transit …… …………….
(9,000) _______ P48,500
9,000
24,000 24,000
BRANCH ACCOUNT P 8,400
HOME OFFICE ACCOUNT… P 9,735
615 2,50 2,500 0 90 P10,990 640
P10,350
Corrected Ba Balances …… ………………………………………………
P10,350
(b) Branch Books: Shipments fr from Ho Home Of Office-i e-in Tr Transit …… ……………………. Home Office …………………………………………...
615
Home Office Books: Branch …… …………………………………………………………… Accounts Receivable ………………………………..
2,500
P10,350
615
2,500
Branch …………………………………………………………… Retained Earnings …………………………………….
90
Merchandise Re Returns fr from Br Branch – in Tr Transit …… ……………. Branch …………………………………………………..
640
90
6 40
Problem VI 1.
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 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 2. Home Home offi office ce books books:: Jan. 31 Re Retained Earnings Wilshire Branch 31
31
Cash in Transit Wilshire Branch Wilshire Branch
Branch Account P 77,150
Home office Account P 56,450
600 4,400 ____750 P77,900
_______ P61,450
540 16,000
_______ P 61360
___90 P 61,360
540 540 16,000 16,000 750
Accounts Receivable Branch Books: Jan. 31 Ad Advertising Expense Home Office 31
31
Shipments from Home Office – In Transit Home Office Home Office Shipments from Home Office
750
600 600 4,400 4,400 90 90
Problem VII 1.
Balances before adjustments Adjustments: Additions: Corrected Corrected branch branch income income for for January January (P1,44 (P1,440 0 – P215) Understatement of branch paid by home office for December Expenses of branch paid by home office Deductions: Collection by home office of branch receivable Correction of branch income for January Merchandise transferred to Brentwood branch but incorrectly charged by Beverly Hills branch Merchandise returns to home office in transit Uncollectible accounts of branch Corrected Balances
Branch Account P 59,365
Home Office Account P 57,525
1,225 310 _______ P 60,900
____215 P 57,740 65 215
1,400 84 0 __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
Home Office Accounts Receivable (b) Entries to bring home office books up to date: Beverly Hills Branch Beverly Hills Branch Income
215
215 65 65
1,225 1,225
Beverly Hills Branch Retained Earnings
310 310
Shipments to Beverly Hills Branch Beverly Hills Branch
1,400
Brentwood Branch Shipments to Brentwood Branch
1,400
1,400
Merc Mercha hand ndis ise e Retu Return rnss from from Bran Branch ch – In Tran Transi sitt – Beve Beverl rly y Hills Branch Beverly Hills Branch Allowance for Doubtful Accounts – Beverly Hills Branch Beverly Hills Branch
1,400
840 840 1,200 1,200
Problem VIII 1. (b) Mdse. allowance by home office (f) Truck repairs charged by home office
Net credit Total
Home Office (a) Charge for office furniture 350.00 by home office (d) Charge for labor by home 293.00 office (e) Charge for freight by home office (h) (h) Pro Procee ceeds from from sale ale of truc truck k 643.00 1,556.50 1,229.50
Branch (a) Purchase of office furniture for (b) Mdse. allowance for branch 870.00 branch (c) Branch charge for interest 325.00 (g) Proceeds from sale of truck (d) Branch charge for labor 433.00 (e) Branch charge for freight _785.00 2,413.00 _______ Net Debit Total 2,413.00 Balan Balance ce in branc branch h acc accou ount nt per per hom home e off offic ice e boo book, k, Septe Septemb mber er 30, 30, 20x 20x2 2 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 Balan Balance ce in in home home off offic ice e acco accoun untt per per bran branch ch boo books ks,, Septe Septemb mber er 30, 30, 20x 20x2 2
780.00 866.00 78.50 475. 475.00 00 2,199.50 _______ 2,199.50
300.00 475.00
______ 775.00 1,638,000 _2,413.00 P 131, 131,69 690. 0.00 00 1,638.00 P 130,052.00 __1,556.50 P 131, 131,60 608. 8.50 50
2. Balance in home office account per branch books, September 30, 20x2 Add: dd: (a) Fail Failu ure by bran branch ch to take take up full full furn furnit itu ure charg harges es (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 t o recognize full freight charges (f) Truck repairs charge to home office account in error 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
P 131,608.50 P 90.0 90.00 0 50.00 325 706.50 293.00
___1,464.50 P 133,073.00
433.00
__475.00
___908.00 P 132,265.00
3. Balance in branch account per home office books, September 30, 20x2 Add credit to branch account made in error for proceeds from sale of truck Corrected interoffice balance, September 30, 20x2
P 131,690.00 _____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
P 19,000 2,000
Branch B P 12,000 1,500
Accounts receivable, December 31 Total Assets Less: Liabilities Home Office Current Account
70,000 P 91,000 -0P 91,000
53,500 P 67,000 -0P 67,000
3. d – incidentally, incidentally, the entry entry in the books books of of the branch branch would would be as follows: follows: Profit and loss summary ………………………………………………………… ………………………………………………………… xxx Home Office Current………………………………… Current……………………………………………………. …………………. Xxx 4. c Janu Januar ary y 1,20 1,20x4 x4 Assets: Inventory Petty cash fund Accounts receivable Total Assets Less: Liabilities Home Office Current Account
Janu Januar ary y 1, 20x5 20x5
P 37,000 3,000 43,000 P 83,000 _____-0P 83,000
5. a – refer to No. 4 for computations computations 6. a Sales Less: Cost of goods sold: SFHO…………………………………………………………… Less: In Inventory, en ending……………………………………… Gross profit…………………………………………… profit…………………………………………………………… ……………… Less: Expenses – Net Loss………………………………………………………………..
P 41,000 3,000 49,000 P 93,000 _____-0P 93,000
P 74,000 P67,680 9,180
5 8 ,5 0 0 P 15,500 6 ,8 2 0 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 accounts have zero zero beginning beginning balance. balance. 9. d Branch Current
H. Office Current
Unadjusted balance, 6/30/20x4 P 225,770 P 226,485* Add (Deduct): (Deduct): Adjustmen Adjustments ts 1 Erroneous recording of branch equipment 3150 2. Insurance premium recorded twice ( 675) 3. Erroneous recording of freight ( 90) 4. Discount on merchandise ( 800) 5. Fai lure by the branch to record share in advertising 70 0 6. error by the home office to record remittance of Cebu 3 ,0 0 0 ________ 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 Expe Expens nses es - HO Expen Expense sess – branc branch h Error Adjusted balance
Home Office Books (Branch CurrentDr. balance) P518,575
Branch Books (Home (Home Office Office Curren Currentt – Cr. bala balance nce)) P452,276 10,500
( 1 7 ,0 0 0 ) ( 775) 25,000 (
800)
________ P 500,000
12,000 _____224 P 500,000
11. d
Unadjusted balance Add (deduct) adjustments: Excess freight Cash in transit Returns Expenses – branch Adjusted balance
Home Home Office Office Books (Branch CurrentDr. balance) P515,000
Branch Books (Home (Home Office Office Curren Currentt – Cr. bala balance nce)) P495,750 (
750)
( 11,000) ( 4,000) ________
5,000
P 500,000
P 500,000
12. c – refer to No. 11 for for computation computationss 13. a – refer to No. 11 for for computations computations 14. d – refer refer to to No. 11 for for compu computati tations ons 15. d - No entry entry should should be made made in the books books of the home home office, office, since the freigh freightt should should chargeable to the branch and the payment of the freight was made by the branch. 16. a Home Office Books Branch Books (Branch Current(Home (Home Office Office Curren Currentt – Dr. balance) Cr. bala balance nce)) 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 ( 1 4 ,5 0 0 ) Remittance ( 2 2 ,0 0 0 ) _________ Adjusted balance P 48,500 P 48,500 17. b
Unadjusted balance
Home Office Books (Branch CurrentDr. balance) P590,000
Branch Books (Home (Home Office Office Curren Currentt – Cr. bala balance nce)) P506,700
be
Add (deduct) adjustments: Remittance Returns Error by the branch Expenses – branch Adjusted balance
(40,000) (15,000) ________
3 00 28,000
P 535,000
P 535,000
Home Office Books (Branch CurrentDr. balance) P150,000
Branch Books (Home (Home Office Office Curren Currentt – 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
25,000 P 179,920
Home Office Books (Branch (Branch CurrentCurrent- Dr. balance) P40,000
Branch Books (Home (Home Office Office Curren Currentt – Cr. bala balance nce)) P31,100
19. 19. d – refe referr to to No. No. 18 for comp comput utati ation on.. 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
5,800 50 0 2,000 ( 3,600) P38,900
2,000 _______ P38,900
21. 21. a – refe referr to No. No. 20 for for comp comput utati ation onss 22. a
Unadjusted balance Add (deduct) adjustments: Collection of branch A/R In transit Purchase of furniture Return of excess merchandise Remittance Adjusted balance 23. b – refer refer to to No. 22 for comp computa utation tionss
Home Office Books (Branch (Branch CurrentCurrent- Dr. balance) P49,600
Branch Books (Home (Home Offi Office ce Curr Curren entt – Cr. bala balance nce)) P44,00 (
( 1,200) ( 1,500) ( 500) P46,400
800) 3,200
_______ P46,400
24. (C) Sales (P350,000 + P100,000)…………………………………… P100,000)………………………………………………………….P …………………….P 450,000 Less: Cost of goods sold: Purc Purcha hase sess (P40 (P400, 0,00 000 0 + P50 P50,0 ,000 00)… )……… ………… ………… ………… ………… …….. P 450, 450,00 000 0 Les Less: Inve Invent ntor ory, y, endi ending ng… ……… ………… ……… ……… ……… ……… ……… ……… ……… … 90,0 90,000 00 360, 360,00 000 0 Gross profit…………………………………………… profit…………………………………………………………… ……………… P 90,000 Less: Less: Expenses Expenses – Salaries and commission…………………………………….. P 70,000 Rent……………………………………………………………… 20,000 Advertising Advertising supplies supplies (P10,000 (P10,000 – P6,000)………… 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 peri od. 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. 26. d Normally, transactions of the agency are recorded in the books of the home office separately identified with the appropriate agency.
Quiz Qu iz-- XII XII 1. P78, 78,000 000 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. P64, P64,000 000 – refer refer to No. 1 3. P10, P10,41 416 6 Sales …… … …….………………………………………………………… Less: Cost of goods sold: Purchases……………………………..…… ……… ………………… …….. Shipments from home office……………………………… Less: Inventory, ending (P3,391 + P7,625)…….………… Gross Gross profit… profit……… …………… ……………… ……………… ……………… ……………… ……………… …………… …… Add (deduct): Expenses……………………………………………………….. Expenses………………………………………………… …….. Interest expense………………………………………………. Gain on sale…………………………………………………...
P 80 8 0,000 P 25,000 56,216 11,016
70,200 P 9,800 9,800 ( 7,500) ( 684) 8,800
Net Income………………………………………………………………..
P 10,416
4. P31,416 = P21,000 + P10,416 5. Zero, since it is a nominal account 6. P117,42 P117,420 0 Home Office Books (Branch CurrentDr. balance) P150,000
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
Branch Books (Home (Home Office Office Curren Currentt – Cr. bala balance nce)) P117,420 37,500
10,500 ( 4,500) ( 1,080) 25,000 P 179,920
25,000 P 179,920
7. P179 P179,9 ,920 20 - refe referr to No. 6 for for comp comput utat atio ion. n. 8. c 9. a 10. 10. P7,1 P7,100 00 Sales
P17,600
Less: Cost of goods sold Gross profit Less: Expenses Salaries an and co commission [P [P1,750 + (5 (5% x (P17,600 – P10,000) Rent expense Adverti sing expense Samples expense [(P5,000 – P2,000) x 1/6] Adverti sing materials expense (3/5 x P1,250) Depreciati0n expense [(P2,400 / 5 years) x 1/12] Miscellaneous expense Net income
1 0 ,5 0 0 P 7 ,100 P2 2,,130 8 00 3 25 5 00 75 0 40 ___600
__5,145 P 1 ,9 5 5
11. 11. P5,1 P5,145 45 – refe referr to to No. No. 10 12. P1,955 P1,955 – refer refer to No. 10
Theories 1. 2. 3. 4. 5. 6. 7. 8. 9. 10,
decentralized Home Office Current Branch Income Home Office intracompany Tr True TTrrue Fa F alse Fa False Tr True
11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
False False False True True Fa F alse TTrrue Fa F alse Tr True Tr T rue
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
41 . 42 . 43 . 44 . 45 . 46. 47. 48. 49. 50. 51. 52.
A C B D D C B B C C C D
