Chapter 12 Problem I (a)Working Fund – Agency ……………………………… ……………………….. Cash …………………………………………………………………………. (b)Accounts Receivable …………………………………..................................... Sales-Agency ……………………………………………………………….
5,000 5,000 50,000 50,000
(c)Cash ………………………………………………………..................................... Accounts Receivable ……………………………………………………..
35,000 35,000
(d)Expenses-Agency ……………………………………………………………….. Cash ………………………………………………………………………….
4,500
(e)Expenses-Agency ……………………………………………………………….. Cash ………………………………………………………………………….
2,250
4,500 2,250
(f)Cost of Goods Sold-Agency …………………………………………………… 36,000 Merchandise Shipments-Agency ………………………………………. 36,000 Problem II (a) Branch Books: (a) Cash ………………………………………………………….. Home Office ……………………………………………
42,500
(b) Shipments from Home Office …………………………… Home Office …………………………………………...
50,200
(c) Accounts Receivable ……………………………………. Sales ……………………………………………………..
60,000
(d) Purchases …………………………………………………… Accounts Payable ……………………………………
22,500
(e) Home Office ……………………………………………….. Accounts Receivable …………………………..
53,400
(f) Accounts Payable ………………………………………... Cash ……………………………………………………..
12,250
(g) Furniture & Fixtures ………………………………………… Cash …………………………………………………….. (h) Expenses …………………………………………………….. Cash ……………………………………………………..
42,500 50,200 60,000 22,500 53,400 12,250
8,000
8,000
18,000 18,000
(b) Home Office Books: (a) Branch ………………………………………………………. Cash …………………………………………………….
42,500
(b) Branch ………………………………………………………
50,200
42,500
Shipments to Branch ………………………………..
50,200
(c) Accounts Receivable …………………………………... Sales ……………………………………………………
105,000
(d) Purchases …………………………………………………. Accounts Payable ………………………………….
122,500
(e) Cash ……………………………………………………….. Accounts Receivable ………………………………
113,600
(f) Accounts Payable ………………………………………. Cash ……………………………………………………
124,000
(g) Expenses …………………………………………………… Cash ……………………………………………………
26,600
(h) Cash ……………………………………………………….. Branch ………………………………………………...
53,400
(i) Retained Earnings ………………………………………. Cash …………………………………………………...
10,000
105,000 122,500 113,600 124,000 26,600 53,400 10,000
BARTON CO. Balance Sheet for Branch December 31, 20x4 Assets
Liabilities
Cash …………………………… 10,250 Accounts Receivable ……… 300 Merchandise Inv……………... 37,900 Prepaid Expenses …………… Furnitures & Fixtures …. P 8,000 Less accum. Depr …… 650 Total Assets …………………… ………………….P48,450
P 4,250
Accounts Payable ………… P
12,600
Accrued Expenses ……………
23,500
Home Office …………………..
750 7,350 P48,450
Total Liabilities
BARTON CO. Income Statement for Branch For Year Ended December 31, 19X6 Sales …………………………………………………………………………… P66,000 Cost of Goods Sold: Purchases …………………………………………………………… Shipments for home office ………………………………………. Merchandise available for sale ………………………………… Less merchandise inv, December 31 ………………………….. Cost of Goods Sold ………………………………………………..
P22,500 P72,700
50,200 23,500
49,200
Gross Profit ……………………………………………………………………. Expenses ……………………………………………………………………… Net loss ………………………………………………………………………...
P16,800 18,200 P 1,400
BARTON CO. Income Statement for Branch For Year Ended December 31, 20x4 Assets
Liabilities & Stockholders Equity
Cash …………………………….. P 23,200 Liabilities Accounts Receivable ……….. 19,050 Accounts payable ………… P 21,300 Merchandise Inventory……… 48,500 Accrued Expenses …………. 1,350 P22,650 Prepaid Expenses ……………. 2,050 Stockholders Equity Furniture & Fixtures …. P 20,000 Capital stock, P20 par……… P50,000 Less accum. Depr….. 5,580 14,420 Retained Earnings …………. 72,740 122,470 Branch ………………………… 37,900 Total liabilities and stockholders’ Total Assets …………………... P145,120 equity ………………… P145,120 BARTON CO. Income Statement for Home Office For Year Ended December 31, 20x4 Sales ……………………………………………………………………………....... Cost of goods sold: Merchandise inventory, January 1 …………………………………. Purchases ………………………………………………………………... Merchandise available for sale ……………………………………… Less shipments to branch ……………………………………………... Merchandise available for own sale ……………………………….. Less merchandise inventory, December 31 ………………………. Cost of Goods Sold ……………………………………………………. Gross Profit ………………………………………………………………………… Expenses …………………………………………………………………………… Net income from own operations …………………………………………….. Deduct branch net loss …………………………………………………………. Total Income ……………………………………………………………………….
P105,000 P 40,120 122,500 P162,620 50,200 P112,420 48,500 63,920 P 41,080 27,630 P 13,450 1,400 P 12,050
BARTON CO. Income Statement for Home Office For Year Ended December 31, 20x4 Sales …………………………………………………………………………………. Cost of goods sold: Merchandise inventory, January 1 ………………………………….. Purchases ………………………………………………………………… Merchandise available for sale ……………………………………… Less merchandise inventory, December 31 ……………………….. Cost of goods sold ………………………………………………………. Gross profit ………………………………………………………………………….. Expenses …………………………………………………………………………….. Net Income ………………………………………………………………………….
P171,000 P 40,120 145,000 P185,120 72,000
113,120 P 57,880 45,830 P 12,050
(a) Branch Books: Expenses ………………………………………………………………. Accumulated Depreciation – F&F……………………….
650
650
Sales …………………………………………………………………… Merchandise Inventory ……………………………………………. Income summary …………………………………………..
66,000 23,500
Income Summary …………………………………………………… Shipments from Home Office …………………………… 50,200 Purchases …………………………………………………… 22,500 Expenses ……………………………………………………..
90,900
Home Office ………………………………………………………… Income Summary …………………………………………
89,500
18,200 1,400
1,400
(b) Home Office Books Expenses ………………………………………………………………. Accumulated Depreciation – F&F………………………. Sales …………………………………………………………………… Merchandise Inventory ……………………………………………. Shipments to Branch ……………………………………………….. Income summary ………………………………………….. Income Summary …………………………………………………… Merchandise Inventory …………………………………… Purchases ……………………………………………………. Expenses ……………………………………………………..
1,180 1,180 105,000 48,500 50,200 203,700 190,250 40,120 122,500 27,630
Branch Income ……………………………………………………… Branch ……………………………………………………….
1,400 1,400
Income Summary ………………………………………………….. Branch Income ……………………………………………
1,400
Income Summary ………………………………………………….. Retained Earnings ………………………………………..
12,050 12,050
Problem III (a) Branch Books: Jan.
1
Cash …………………………………………. Home Office ………………………
1,500
1
Shipments from home office ……………. Home Office ………………………
10,200
1,400
1,500
10,200
1
Home Office ……………………………….. Cash ………………………………..
900
Accts. Rec. – Home office ………………. Home Office ………………………
2,600
Accts. Rec.-Home Office ………………. Sales ………………………………..
6,200
1-31
Cash ……………………………………….. Accounts Receivable …………..
2,600
1-31
Purchases …………………………………. Accounts Payable ………………
3,000
1 1-31
Jan.
1-31
Accounts Payable ………………………. Cash ………………………………..
1-31
Expenses ………………………………….. Cash ……………………………….
1,450
1,250
Home Office ……………………………… Accts. Rec.-Home Office …….
150
Shipments from Home Office ………… Home Office …………………….
1,250
1 1 1
1,450
1,250
1-31
Home Office ……………………………… Cash ……………………………… (b) Home Office Books:
2,600 3,000
Cash ………………………………………… Accts. Rec.-Home Office ……...
1-31
2,600 6,200
1-31
1-31
Jan.
900
1,600
1,600 150 1,250
1,000 1,000
Branch …………………………………….. 1,500 Cash ……………………………… Branch …………………………………….. 10,200 Shipments to Branch ………….. Store Furniture and Fixtures Branch ….. 3,000 Store Furniture and Fixtures …...
1,500 10,200 3,000
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
Store Furniture and Fixtures Branch ….. Branch ……………………………
1
Branch …………………………………… 2,600 Accounts Receivable ….........
900
900 2,600
1-31
Accounts Receivable ………………… 34,600 Sales ………................................
34,600
1-31
Cash ………………………………………. 40,000 Accounts Receivable …………
40,000
1-31
Purchases ………………………………….31,600 Accounts Receivable ………….
31,600
1-31
Accounts Payable ……………………… 36,200 Cash ……………………………...
36,200
1-31
Accrued Expenses Payable …………. Expenses …………………………………. Cash ……………………………..
1-31
250 8,950
9,200
Allowance for Doubtful Accounts ….. Branch …………………………..
150
1-31
Branch ……………………………………. Shipments to Branch …………
1,250
1-31
Cash ……………………………………… Branch ………………………….
150 1,250
1,000 1,000
EAGLE CO. Balance Sheet January 31, 20x4 Assets
Liabilities
Cash …………............................ Accounts Receivable ………….. Accts. Rec.-home office ………. Merchandise Inventory ………… Merchandise in Transit …………. Total assets ………………… P37,200
P 1,100 3,600 850 9,800 600 P37,200
Accounts Payable ………………. P 2,400 Accrued expenses ………………. 400 Home Office ……………………… 14,050 Total Liabilities …………………….
EAGLE CO. Income Statement for Branch For Month Ended January 31, 20x4 Sales …………………………………………………………………………………………. P Cost of Goods Sold: Purchases …………………………………………………… P 3,000 Shipments from home office ……………………………. 11,450 Shipments from home office in transit ………….......... 600 Merchandise Available for Sale ……………………….. P15,050 Less merchandise inv. Dec 31, 19X9 ……................P9,800 Merchandise in transit ………………………….. 600 10,400 Cost of Goods Sold ……………………………………………………………. Gross Profit ………………………………………………………………………………… P Expenses ……………………………………………………………………………………
6,200
4,650 1,550 2,110
Net Loss …………………………………………………………………………………..
..
P
560
EAGLE CO. Balance Sheet for Home Office 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 ……………………………… P 3,900 Less accumulated depreciation ……………………… 785 Branch office ………………………………………………………... Total Assets ……………………………………………………………
P 9,100 32,950 44,500 8,050 3,315 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 Ended January 31, 20x4 Sales ……………………………………………………………………………… P 34,600 Cost of goods sold: Merchandise inventory, 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 merchandise inventory, January 31 ……………… 44,500 Cost of goods sold …………………………………………………………… 21,050 Gross Profit ………………………………………………………………………… P 13,650 Expenses …………………………………………………………………………… 9,325 Net income from own operations ……………………………………………. P 4,225 Deduct branch net loss ………………………………………………………… 560 Total Income …………………………………………………………………… P 3,665
Assets
EAGLE CO. Income Statement for Home Office For Month Ended January 31, 20x4 Liabiities and Stockholders Equity
Liabilities Cash …………………………….. ………. P 10,200 Accounts Payable …… P30,700 Accounts receivable ……….. P38,450 Accrued Expenses …… 1,100 P 31,800 Less allow for doubtFul accounts ……….. 1,050 37,400 Merchandise Inventory ……………….. 54,900 Stockholders Equity Store furn. & fixtures ………… P15,900 Capital Stocks …………P50,000 Less accum depr 4,735 11,165 Retained earnings …… 31,865 81,865 Total assets ……………………………… P113,665 Total liab. And stockholders equity . P113,665 EAGLE CO. Combined Income Statement for Home Office and Branch For Month Ended January 31, 20x4 Sales ………………………………………………………………………………….. Cost of goods sold: Merchandise Inventory, January 1 ………………. P46,000 Purchases ……………………………………………... 34,600 Merchandise available for sale …………………... P80,600 Less merchandise inventory, Jan 31 ……………... 54,900 Cost of goods sold …………………………………............................... Gross profit …………………………………………………………………………... Expenses ……………………………………………………………………………… Net Income …………………………………………………………………………..
P 40,800
25,700 P 15,100 11,435 P 3,665
(a) Branch 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
Merchandise Inventory ……………………… 9,800 Merchandise in Transit ……………………….. 600 Income Summary ……………………
31
Expenses ……………………………………….. Accrued Expenses ………………….
350
31
Sales ……………………………………………. Income Summary …………………..
6,200
31
Income Summary ……………………………. 17,160 Shipments from Home Office ……. Ship. From Home Office – in Trans . Purchases ……………………………
475 35
10,400 350 6,200 11,450 600 3,000
Expenses …………………………….. 31
Home Office ………………………………….. Income Summary …………………...
2,110 560 560
(b) Home Office Books: 31
Branch …………………………………………. Shipments to Branch ……………….
600
31
Branch …………………………………………. Expenses ……………………………...
475
31
31
475 35 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)
31
Income Summary …………………………… Merchandise Inventory ……………
46,000
31
Merchandise Inventory …………………….. Income Summary …………………..
44,500
31
Expenses ………………………………………. Accrued Expenses ………………….
31
Sales …………………………………………… Purchases …………………………… Expenses ……………………………..
31
Problem IV 1.
Branch …………………………………………. Accumulated Depreciation, Store Furniture and Fixtures Branch ……..
600
100
46,000 44,500
750
750
40,925 31,600 9,325
Branch Income ………………………………. Branch ………………………………..
560
31
Income Summary ……………………………. Branch Income ……………………...
560
31
Income Summary ……………………………. Retained Earnings …………………..
3,665
560
Socrates Company Home Office and Plato Branch Reconciliation of Reciprocal Ledger Accounts June 30, 20x4 Investment in
560 3,665
Account
Plato Branch Ledger Account (Debit) P85,000
Home Office Ledger
Balances prior to adjustment Add: Merchandise shipped to branch Less: Acquisition of office equipment by branch (carried in accounting records of home office)(14,500) Collection of branch trade accounts receivable Payment of cash by branch (22,000) Adjusted balances P48,500 2.
(Credit) P33,500 24,000 (9,000) _______ P48,500
(a) Accounting records of home office: Office Equipment: Plato Branch 14,500 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)
22,000
Accounting records of branch: 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 …………………. Collection of Home office receivable by Branch Understatement of branch net income for Nov.. Deductions: Merchandise return to home office in transit ……………. Corrected Balances ……………………………………………… (b) Branch Books: Shipments from Home Office-in Transit ……………………. Home Office …………………………………………... Home Office Books: Branch …………………………………………………………… Accounts Receivable ………………………………..
24,000
BRANCH ACCOUNT P 8,400
14,500
22,000
9,000
24,000
HOME OFFICE ACCOUNT… P 9,735 615
2,500 90 P10,990
P10,350
640 P10,350
P10,350
615
2,500
615
2,500
Branch …………………………………………………………… Retained Earnings ……………………………………. Merchandise Returns from Branch – in Transit ……………. Branch …………………………………………………..
90 90 640
640
Problem VI
1. Branch Account 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 office books: Jan. 31 Retained Earnings Wilshire Branch 31 31
Cash in Transit Wilshire Branch Wilshire Branch Accounts Receivable
Branch Books: Jan. 31 Advertising Expense Home Office 31 31
Shipments from Home Office – In Transit Home Office Home Office
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 16,000 750 750 600 600 4,400 4,400 90
Shipments from Home Office
90
Problem VII
1. Branch Account Balances before adjustments Adjustments: Additions: Corrected branch income for January (P1,440 – 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
P 59,365
Home Office Account P 57,525
1,225 310 _______ P 60,900
____215 P 57,740 65 215
1,400 840 __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 Beverly Hills Branch Retained Earnings
215 215 65 65 1,225 1,225 310 310
Shipments to Beverly Hills Branch Beverly Hills Branch
1,400
Brentwood Branch Shipments to Brentwood Branch
1,400
Merchandise Returns from Branch – In Transit – Beverly Hills Branch Beverly Hills Branch
1,400 1,400 840 840
Allowance for Doubtful Accounts – Beverly Hills Branch Beverly Hills Branch Problem VIII 1. (b) Mdse. allowance by home office (f) Truck repairs charged by home office
Net credit Total
(a) Purchase of office furniture for branch (c) Branch charge for interest (d) Branch charge for labor (e) Branch charge for freight
1,200 1,200
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) Proceeds from sale of truck 643.00 1,556.5 0 1,229.5 0 Branch (b) Mdse. allowance for 870.00 branch 325.00 (g) Proceeds from sale of truck 433.00 _785.0 0 2,413.0 0 _______ Net Debit Total 2,413.0 0
Balance in branch account per home office book, September 30, 20x2 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 Balance in home office account per branch books, September 30, 20x2
780.00 866.00 78.50 475.00 2,199.5 0 _______ 2,199.5 0
300.00 475.00 ______ 775.00 1,638,00 0 _2,413.0 0 P 131,690.00 1,638.00 P 130,052.00 __1,556.50 P 131,608.50
2. Balance in home office account per branch books, September 30, 20x2
P
131,608.50 Add:
(a) Failure by branch to take up full furniture charges (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 recognize full freight charges (f) Truck repairs charge to home office account in error
P 90.00
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
433.00
50.00 325 706.50 293.00
__475.00
___1,464.50 P 133,073.00
___908.00 P 132,265.00
3. Balance in branch account per home office books, September 30, 20x2
P 131,690.00
Add credit to branch account made in error for proceeds from sale of truck Corrected interoffice balance, September 30, 20x2
_____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
2.
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
b Branch A Assets:
Branch B
Inventory, December 31 Imprest branch fund Accounts receivable, December 31 Total Assets Less: Liabilities Home Office Current Account
P 19,000 2,000 70,000 P 91,000 -0P 91,000
P 12,000 1,500 53,500 P 67,000 -0P 67,000
3. d – incidentally, the entry in the books of the branch would be as follows: Profit and loss summary ………………………………………………………… xxx Home Office Current……………………………………………………. Xxx 4. c
January 1,20x4 Assets: Inventory Petty cash fund Accounts receivable Total Assets Less: Liabilities Home Office Current Account
January 1, 20x5
P 37,000 3,000 43,000 P 83,000 _____-0P 83,000
5. a – refer to No. 4 for computations 6. a Sales Less: Cost of goods sold: SFHO…………………………………………………………… Less: Inventory, ending……………………………………… Gross 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
58,500 P 15,500 6,820 P 8,680
7. a Assets: Cash Inventory Accounts receivable Total Assets Less: Liabilities Home Office Current Account
January 1, 20x6 P 4,200 9,180 12,800 P 26,180 _____-0P 26,180
8. a – nominal accounts have zero beginning balance. 9. d Branch Current Unadjusted balance, 6/30/20x4 Add (Deduct): Adjustments 1 Erroneous recording of branch equipment 2. Insurance premium recorded twice 3. Erroneous recording of freight 4. Discount on merchandise 5. Failure by the branch to record share in advertising 6. error by the home office to record remittance of
P 225,770
H. Office Current P 226,485*
( ( ( 3,000
3150 675) 90) 800) 700 ________
Cebu 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 Expenses - HO Expenses – branch Error Adjusted balance 11. d
Unadjusted balance Add (deduct) adjustments: Excess freight Cash in transit Returns Expenses – branch Adjusted balance
Home Office Books (Branch CurrentDr. balance) P518,575
P2-07
Branch Books (Home Office Current – Cr. balance) P452,276 10,500
( 17,000) ( 775) (
25,000
800)
________ P 500,000
12,000 _____224 P 500,000
Home Office Books (Branch CurrentDr. balance) P515,000
Branch Books (Home Office Current – Cr. balance) P495,750
( 11,000) ( 4,000) ________ P 500,000
(
750) 5,000
P 500,000
12. 13. 14. 15.
c – refer to No. 11 for computations a – refer to No. 11 for computations d – refer to No. 11 for computations d - No entry should be made in the books of the home office, since the freight should be 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 Office Current – Dr. balance) Cr. balance) 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 ( 14,500) Remittance ( 22,000) _________ Adjusted balance P 48,500 P 48,500 17. b Home Office Books (Branch CurrentDr. balance)
Branch Books (Home Office Current – Cr. balance)
Unadjusted balance Add (deduct) adjustments: Remittance Returns Error by the branch Expenses – branch Adjusted balance 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
P590,000
P506,700
(40,000) (15,000) ________
300 28,000
P 535,000
P 535,000
Home Office Books (Branch CurrentDr. balance) P150,000
Branch Books (Home Office Current – Cr. balance) P117,420 37,500
10,500 ( 4,500) ( 1,080) 25,000 P 179,920
25,000 P 179,920
Home Office Books (Branch Current- Dr. balance) P40,000
Branch Books (Home Office Current – Cr. balance) P31,100
19. d – refer to No. 18 for computation. 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
5,800 500 2,000 ( 3,600) P38,900
2,000 _______ P38,900
Home Office Books (Branch Current- Dr. balance) P49,600
Branch Books (Home Office Current – Cr. balance) P44,00
21. a – refer to No. 20 for computations 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 to No. 22 for computations 24. (C)
( ( 1,200) ( 1,500) ( 500) P46,400
800) 3,200
_______ P46,400
Sales (P350,000 + P100,000)………………………………………………………….P 450,000 Less: Cost of goods sold: Purchases (P400,000 + P50,000)……………………………. P 450,000 Less: Inventory, ending……………………………………… 90,000 360,000 Gross profit…………………………………………………………… P 90,000 Less: Expenses – Salaries and commission…………………………………….. P 70,000 Rent……………………………………………………………… 20,000 Advertising supplies (P10,000 – 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 period. 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- XII 1. P78,000 Assets: Inventory, January 1 Imprest branch fund Accounts receivable, January 1 Total Assets Less: Liabilities Home Office Current Account
Branch A 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. P64,000 – refer to No. 1 3. P10,416 Sales ……….………………………………………………………… Less: Cost of goods sold: Purchases……………………………..………………………. Shipments from home office……………………………… Less: Inventory, ending (P3,391 + P7,625)…….………… Gross profit…………………………………………………………… Add (deduct): Expenses……………………………………………………….. Interest expense………………………………………………. Gain on sale…………………………………………………... Net Income……………………………………………………………….. 4. P31,416 = P21,000 + P10,416
P 80,000 P 25,000 56,216 11,016 70,200 P 9,800 ( 7,500) ( 684) 8,800 P 10,416
5. Zero, since it is a nominal account 6. P117,420
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
Home Office Books (Branch CurrentDr. balance) P150,000
Branch Books (Home Office Current – Cr. balance) P117,420 37,500
10,500 ( 4,500) ( 1,080) 25,000 P 179,920
25,000 P 179,920
7. P179,920 - refer to No. 6 for computation. 8. c 9. a 10. P7,100 Sales
P17,600
Less: Cost of goods sold Gross profit Less: Expenses Salaries and commission [P1,750 + (5% x (P17,600 – P10,000) Rent expense Advertising expense Samples expense [(P5,000 – P2,000) x 1/6] Advertising materials expense (3/5 x P1,250) Depreciati0n expense [(P2,400 / 5 years) x 1/12] Miscellaneous expense Net income
10,500 P 7,100 P 2,130 800 325 500 750 40 ___600
__5,145 P 1,955
11. P5,145 – refer to No. 10 12. P1,955 – refer to No. 10
Theories 1.
decentralized
2.
Home Office Current
3.
Branch Income
4.
Home Office
5.
intracompany
6.
True
7.
True
8.
False
9.
False
11 . 12 . 13 . 14 . 15 . 16 . 17 . 18 . 19
False
21.
False
31.
E
False
22.
True
32.
B
False
23.
True
33.
c
True
24.
True
34.
d
True
25.
False
35.
A
False
26.
C
36.
C
True
27.
A
37.
A
False
28.
A
38.
B
True
29.
D
39.
B
41 . 42 . 43 . 44 . 45 . 46 . 47 . 48 . 49
A C B D D C B B C
10 ,
True
. 20 .
True
30.
A
40.
B
. 50 . 51 . 52 .
C C D
