solution chapter 12
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7/17/2019 Solution Chapter 12
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Chapter 12
Problem I
(a)Working Fund – Agency ……………………………………………………….. 5,000
Cash …………………………………………………………………………. 5,000
(b)Accounts Receivable …………………………………..................................... 50,000Sales-Agency ………………………………………………………………. 50,000
(c)Cash ………………………………………………………..................................... 35,000
Accounts Receivable …………………………………………………….. 35,000
(d)Expenses-Agency ……………………………………………………………….. 4,500
Cash …………………………………………………………………………. 4,500
(e)Expenses-Agency ……………………………………………………………….. 2,250
Cash …………………………………………………………………………. 2,250
(f)Cost of Goods Sold-Agency …………………………………………………… 36,000
Merchandise Shipments-Agency ………………………………………. 36,000
Problem II
(a) Branch Books:
(a) Cash ………………………………………………………….. 42,500
Home Office …………………………………………… 42,500
(b) Shipments from Home Office …………………………… 50,200
Home Office …………………………………………... 50,200
(c) Accounts Receivable ……………………………………. 60,000
Sales …………………………………………………….. 60,000
(d) Purchases …………………………………………………… 22,500
Accounts Payable …………………………………… 22,500
(e) Home Office ……………………………………………….. 53,400
Accounts Receivable ………………………….. 53,400
(f) Accounts Payable ………………………………………... 12,250
Cash …………………………………………………….. 12,250
(g) Furniture & Fixtures ………………………………………… 8,000
Cash …………………………………………………….. 8,000
(h) Expenses …………………………………………………….. 18,000
Cash …………………………………………………….. 18,000
(b) Home Office Books:
(a) Branch ………………………………………………………. 42,500
Cash ……………………………………………………. 42,500
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(b) Branch ……………………………………………………… 50,200
Shipments to Branch ……………………………….. 50,200
(c) Accounts Receivable …………………………………... 105,000
Sales …………………………………………………… 105,000
(d) Purchases …………………………………………………. 122,500
Accounts Payable …………………………………. 122,500
(e) Cash ……………………………………………………….. 113,600
Accounts Receivable ……………………………… 113,600
(f) Accounts Payable ………………………………………. 124,000
Cash …………………………………………………… 124,000
(g) Expenses …………………………………………………… 26,600
Cash …………………………………………………… 26,600
(h) Cash ……………………………………………………….. 53,400
Branch ………………………………………………... 53,400
(i) Retained Earnings ………………………………………. 10,000
Cash …………………………………………………... 10,000
BARTON CO.
Balance Sheet for Branch
December 31, 20x4
Assets Liabilities
Cash …………………………… P 4,250 Accounts Payable ………… P 10,250Accounts Receivable ……… 12,600 Accrued Expenses …………… 300
Merchandise Inv……………... 23,500 Home Office ………………….. 37,900
Prepaid Expenses …………… 750
Furnitures & Fixtures …. P 8,000
Less accum. Depr …… 650 7,350
Total Assets …………………… P48,450 Total Liabilities ………………….P48,450
BARTON CO.
Income Statement for Branch
For Year Ended December 31, 19X6
Sales …………………………………………………………………………… P66,000
Cost of Goods Sold:
Purchases …………………………………………………………… P22,500
Shipments for home office ………………………………………. 50,200
Merchandise available for sale ………………………………… P72,700
Less merchandise inv, December 31 ………………………….. 23,500
Cost of Goods Sold ……………………………………………….. 49,200
Gross Profit ……………………………………………………………………. P16,800
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Expenses ……………………………………………………………………… 18,200
Net loss ………………………………………………………………………... 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 ……………………………………………………………………………....... P105,000
Cost of goods sold:
Merchandise inventory, January 1 …………………………………. P 40,120
Purchases ………………………………………………………………... 122,500
Merchandise available for sale ……………………………………… P162,620
Less shipments to branch ……………………………………………... 50,200
Merchandise available for own sale ……………………………….. P112,420
Less merchandise inventory, December 31 ………………………. 48,500
Cost of Goods Sold ……………………………………………………. 63,920
Gross Profit ………………………………………………………………………… P 41,080Expenses …………………………………………………………………………… 27,630
Net income from own operations …………………………………………….. P 13,450
Deduct branch net loss …………………………………………………………. 1,400
Total Income ………………………………………………………………………. P 12,050
BARTON CO.
Income Statement for Home Office
For Year Ended December 31, 20x4
Sales …………………………………………………………………………………. P171,000
Cost of goods sold:
Merchandise inventory, January 1 ………………………………….. P 40,120Purchases ………………………………………………………………… 145,000
Merchandise available for sale ……………………………………… P185,120
Less merchandise inventory, December 31 ……………………….. 72,000
Cost of goods sold ………………………………………………………. 113,120
Gross profit ………………………………………………………………………….. P 57,880
Expenses …………………………………………………………………………….. 45,830
Net Income …………………………………………………………………………. P 12,050
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(a) Branch Books:
Expenses ………………………………………………………………. 650
Accumulated Depreciation – F&F………………………. 650
Sales …………………………………………………………………… 66,000Merchandise Inventory ……………………………………………. 23,500
Income summary ………………………………………….. 89,500
Income Summary …………………………………………………… 90,900
Shipments from Home Office …………………………… 50,200
Purchases …………………………………………………… 22,500
Expenses …………………………………………………….. 18,200
Home Office ………………………………………………………… 1,400
Income Summary ………………………………………… 1,400
(b) Home Office Books
Expenses ………………………………………………………………. 1,180
Accumulated Depreciation – F&F………………………. 1,180
Sales …………………………………………………………………… 105,000
Merchandise Inventory ……………………………………………. 48,500
Shipments to Branch ……………………………………………….. 50,200
Income summary ………………………………………….. 203,700
Income Summary …………………………………………………… 190,250
Merchandise Inventory …………………………………… 40,120
Purchases ……………………………………………………. 122,500
Expenses …………………………………………………….. 27,630
Branch Income ……………………………………………………… 1,400
Branch ………………………………………………………. 1,400
Income Summary ………………………………………………….. 1,400
Branch Income …………………………………………… 1,400
Income Summary ………………………………………………….. 12,050
Retained Earnings ……………………………………….. 12,050
Problem III
(a) Branch Books:
Jan. 1 Cash …………………………………………. 1,500
Home Office ……………………… 1,500
1 Shipments from home office ……………. 10,200
Home Office ……………………… 10,200
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1 Home Office ……………………………….. 900
Cash ……………………………….. 900
1 Accts. Rec. – Home office ………………. 2,600
Home Office ……………………… 2,600
1-31 Accts. Rec.-Home Office ………………. 6,200Sales ……………………………….. 6,200
1-31 Cash ……………………………………….. 2,600
Accounts Receivable ………….. 2,600
1-31 Purchases …………………………………. 3,000
Accounts Payable ……………… 3,000
1-31 Accounts Payable ………………………. 1,450
Cash ……………………………….. 1,450
1-31 Expenses ………………………………….. 1,250
Cash ………………………………. 1,250
Jan. 1-31 Cash ………………………………………… 1,600
Accts. Rec.-Home Office ……... 1,600
1-31 Home Office ……………………………… 150
Accts. Rec.-Home Office ……. 150
1-31 Shipments from Home Office ………… 1,250
Home Office ……………………. 1,250
1-31 Home Office ……………………………… 1,000
Cash ……………………………… 1,000(b) Home Office Books:
Jan. 1 Branch …………………………………….. 1,500
Cash ……………………………… 1,500
1 Branch …………………………………….. 10,200
Shipments to Branch ………….. 10,200
1 Store Furniture and Fixtures Branch ….. 3,000
Store Furniture and Fixtures …... 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 ….. 900
Branch …………………………… 900
1 Branch …………………………………… 2,600
Accounts Receivable …......... 2,600
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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 …………. 250
Expenses …………………………………. 8,950
Cash …………………………….. 9,200
1-31 Allowance for Doubtful Accounts ….. 150Branch ………………………….. 150
1-31 Branch ……………………………………. 1,250
Shipments to Branch ………… 1,250
1-31 Cash ……………………………………… 1,000
Branch …………………………. 1,000
EAGLE CO.
Balance Sheet
January 31, 20x4
Assets Liabilities
Cash …………............................ P 1,100 Accounts Payable ………………. P 2,400
Accounts Receivable ………….. 3,600 Accrued expenses ………………. 400
Accts. Rec.-home office ………. 850 Home Office ……………………… 14,050
Merchandise Inventory ………… 9,800
Merchandise in Transit …………. 600
Total assets ………………… P37,200 Total Liabilities ……………………. P37,200
EAGLE CO.
Income Statement for Branch
For Month Ended January 31, 20x4
Sales …………………………………………………………………………………………. P 6,200
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
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Merchandise in transit ………………………….. 600 10,400
Cost of Goods Sold ……………………………………………………………. 4,650
Gross Profit ………………………………………………………………………………… P 1,550
Expenses …………………………………………………………………………………… 2,110
Net Loss ………………………………………………………………………………….. .. P 560
EAGLE CO.Balance Sheet for Home Office
January 31, 20x4
Assets
Cash …………………………………………………………………… P 9,100
Accounts Receivable ………………………………………………P34,000
Less allowance for doubtful accounts ……………….. 1,050 32,950
Merchandise Inventory ……………………………………………. 44,500
Store furniture and fixtures …………………………………………P12,000
Less accumulated depreciation ………………………. 3,950 8,050
Store furniture and fixtures-branch ……………………………… P 3,900
Less accumulated depreciation ……………………… 785 3,315
Branch office ………………………………………………………... 14,050
Total Assets …………………………………………………………… P111,765
Liabilities
Accounts Payable …………………………………………….. P29,150
Accrued Expenses …………………………………………….. 750
Total Liabilities ………………………………………………….. P29,900
Stockholders Equity
Capital Stock …………………………………………………… P50,000
Retained earnings …………………………………………….. 31,865
Total stockholder’s equity …………………………………… 81,865Total liabilities and stockholders equity …………………… 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 ………………………………… 12,050Merchandise 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
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EAGLE CO.
Income Statement for Home Office
For Month Ended January 31, 20x4
Assets Liabiities and Stockholders Equity
Liabilities
Cash ……………………………..………. P 10,200 Accounts Payable …… P30,700Accounts receivable ……….. P38,450 Accrued Expenses …… 1,100 P 31,800
Less allow for doubt-
Ful 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 ………………………………………………………………………………….. P 40,800
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 …………………………………............................... 25,700
Gross profit …………………………………………………………………………... P 15,100
Expenses … …………………………………………………………………………… 11,435
Net Income ………………………………………………………………………….. P 3,665
(a) Branch Books
Jan. 31 Shipments from Office-in Transit ……………… 600
Home Office ……………………………. 600
31 Expenses …………………………………………. 475
Home Office ……………………………. 475
31 Expenses ………………………………………… 35
Home Office ………………………….. 35
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 …………………… 10,400
31 Expenses ……………………………………….. 350
Accrued Expenses …………………. 350
31 Sales ……………………………………………. 6,200
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Income Summary ………………….. 6,200
31 Income Summary ……………………………. 17,160
Shipments from Home Office ……. 11,450
Ship. From Home Office – in Trans . 600
Purchases …………………………… 3,000
Expenses …………………………….. 2,110
31 Home Office ………………………………….. 560
Income Summary …………………... 560
(b) Home Office Books:
31 Branch …………………………………………. 600
Shipments to Branch ………………. 600
31 Branch …………………………………………. 475
Expenses ……………………………... 475
31 Branch …………………………………………. 35
Accumulated Depreciation, Store
Furniture and Fixtures Branch …….. 35
31 Expenses ………………………………………. 100
Accumulated Depreciation store
Furniture and Fixtures branch ……. 100
1/120 x P12,000, or P100 (depreciation for one
Month; asset life, 10 years)
31 Income Summary …………………………… 46,000
Merchandise Inventory …………… 46,000
31 Merchandise Inventory …………………….. 44,500
Income Summary ………………….. 44,500
31 Expenses ………………………………………. 750
Accrued Expenses …………………. 750
31 Sales …………………………………………… 40,925
Purchases …………………………… 31,600
Expenses …………………………….. 9,325
31 Branch Income ………………………………. 560
Branch ……………………………….. 560
31 Income Summary ……………………………. 560
Branch Income ……………………... 560
31 Income Summary ……………………………. 3,665
Retained Earnings ………………….. 3,665
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Problem IV
1.
Socrates Company
Home Office and Plato Branch
Reconciliation of Reciprocal Ledger Accounts
June 30, 20x4Investment in
Plato Branch Home Office
Ledger Ledger
Account Account
(Debit) (Credit)
Balances prior to adjustment P85,000 P33,500
Add: Merchandise shipped to branch 24,000
Less: Acquisition of office equipment by branch
(carried in accounting records of home office) (14,500)
Collection of branch trade accounts receivable (9,000)
Payment of cash by branch (22,000) _______
Adjusted balances P48,500 P48,500
2. (a) Accounting records of home office:
Office Equipment: Plato Branch 14,500
Investment in Plato Branch 14,500
To record acquisition of office equipment by branch.
Cash in Transit 22,000
Investment in Plato Branch 22,000
To record cash in transit from branch.
(b) Accounting records of branch:
Home Office 9,000
Trade Accounts Receivable 9,000
To record collection by home office of branch accounts
receivable.
Inventories in Transit 24,000
Home Office 24,000
To record shipment of merchandise in transit from
home office.
Problem V
((a) BRANCH HOME OFFICE
ACCOUNT ACCOUNT…
Balances before Adjustments ……………………………………….. P 8,400 P 9,735Adjustments:
Additions:
Merchandise in transit to branch …………………. 615
Collection of Home office receivable by Branch 2,500
Understatement of branch net income for Nov.. 90
P10,990 P10,350
Deductions:
Merchandise return to home office in transit ……………. 640
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Corrected Balances ……………………………………………… P10,350 P10,350
(b) Branch Books:
Shipments from Home Office-in Transit ……………………. 615
Home Office …………………………………………... 615
Home Office Books:Branch …………………………………………………………… 2,500
Accounts Receivable ……………………………….. 2,500
Branch …………………………………………………………… 90
Retained Earnings ……………………………………. 90
Merchandise Returns from Branch – in Transit ……………. 640
Branch ………………………………………………….. 640
Problem VI
1.
BranchAccount Home officeAccount
Balances before adjustments P 77,150 P 56,450
Adjustments:
Additions:
Advertising charged to branch but not yet recorded
on branch books 600
Merchandise in transit to branch but not yet shown
on branch books 4,400
Collection of home office account by branch not yet
recorded by home office ____750 _______
P77,900 P61,450
Deductions:
Overstatement of branch profit for 20x0 on home
office books 540
Cash in transit to home office but not yet shown on
home office books 16,000
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 _______ ___90
Corrected balances P 61360 P 61,360
2. Home office books:Jan. 31 Retained Earnings 540
Wilshire Branch 540
31 Cash in Transit 16,000
Wilshire Branch 16,000
31 Wilshire Branch 750
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Accounts Receivable 750
Branch Books:
Jan. 31 Advertising Expense 600
Home Office 600
31 Shipments from Home Office – In Transit 4,400
Home Office 4,400
31 Home Office 90
Shipments from Home Office 90
Problem VII
1.
Branch
Account
Home Office
Account
Balances before adjustments P 59,365 P 57,525
Adjustments:
Additions:
Corrected branch income for January (P1,440 –
P215) 1,225
Understatement of branch paid by home office for
December 310
Expenses of branch paid by home office _______ ____215
P 60,900 P 57,740
Deductions:
Collection by home office of branch receivable 65
Correction of branch income for January 215
Merchandise transferred to Brentwood branch but
incorrectly charged by Beverly Hills branch 1,400
Merchandise returns to home office in transit 840
Uncollectible accounts of branch __1,200 _______
Corrected Balances P 57,460 P 57,460
2. (a) Entries to bring branch books up to date:
Correction in Income of Prior Periods 215
Home Office 215
Home Office 215
Income Summary 215
Home Office 65
Accounts Receivable 65
(b) Entries to bring home office books up to date:
Beverly Hills Branch 1,225
Beverly Hills Branch Income 1,225
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Beverly Hills Branch 310
Retained Earnings 310
Shipments to Beverly Hills Branch 1,400
Beverly Hills Branch 1,400
Brentwood Branch 1,400Shipments to Brentwood Branch 1,400
Merchandise Returns from Branch – In Transit – Beverly
Hills Branch 840
Beverly Hills Branch 840
Allowance for Doubtful Accounts – Beverly Hills Branch 1,200
Beverly Hills Branch 1,200
Problem VIII
1.
Home Office(b) Mdse. allowance by home
office 350.00
(a) Charge for office furniture
by home office 780.00
(f) Truck repairs charged by home
office 293.00
(d) Charge for labor by home
office 866.00
(e) Charge for freight by home
office 78.50
(h) Proceeds from sale of truck 475.00
643.00 2,199.50
Net credit Total 1,556.50 _______
1,229.50 2,199.50
Branch(a) Purchase of office furniture for
branch 870.00
(b) Mdse. allowance for
branch 300.00
(c) Branch charge for interest 325.00 (g) Proceeds from sale of
truck
475.00
(d) Branch charge for labor 433.00
(e) Branch charge for freight _785.00 ______
2,413.00 775.00
_______ Net Debit Total 1,638,000
2,413.00 _2,413.00
Balance in branch account per home office book, September 30, 20x2 P 131,690.00
Deduct net debit total per home office books for transactions that involvediscrepancies 1,638.00
P 130,052.00
Add net credit total per branch books for transaction that involve
discrepancies __1,556.50
Balance in home office account per branch books, September 30, 20x2 P 131,608.50
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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 P 90.00
(b) Recognition by branch of excess merchandise
allowance 50.00
(c) Failure by branch to recognize charge by home
office for interest 325
(e) Failure by branch to recognize full freight
charges 706.50
(f) Truck repairs charge to home office account in
error 293.00 ___1,464.50
P 133,073.00
Deduct: (d) Recognition by branch of excess labor
charges
433.00
(h) Credit entry to home office made in error on
sale of truck __475.00 ___908.00
Corrected interoffice balance, September 30, 20x2 P 132,265.003.
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 _____475.00
Corrected interoffice balance, September 30, 20x2 P 132,265.00
4.
Office Furniture 90.00
Merchandise allowances 50.00
Home office interest charges payable 250.00
Interest expense 75.00
Freight In 706.50Repairs on truck 293.00
Labor 433.00
Trucks 475.00
Home Office 556.50
Multiple Choice Problem1. d
Branch A Branch B
Assets:
Inventory, January 1 P 21,000 P 19,000
Imprest branch fund 2,000 1,500
Accounts receivable, January 1 55,000 43,500Total Assets P 78,000 P 64,000
Less: Liabilities -0- -0-
Home Office Current Account P 78,000 P 64,000
2. b
Branch A Branch B
Assets:
Inventory, December 31 P 19,000 P 12,000
Imprest branch fund 2,000 1,500
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Accounts receivable, December 31 70,000 53,500
Total Assets P 91,000 P 67,000
Less: Liabilities -0- -0-
Home Office Current Account P 91,000 P 67,000
3. d – incidentally, the entry in the books of the branch would be as follows:
Profit and loss summary ………………………………………………………… xxxHome Office Current……………………………………………………. Xxx
4. c
January 1,20x4 January 1, 20x5
Assets:
Inventory P 37,000 P 41,000
Petty cash fund 3,000 3,000
Accounts receivable 43,000 49,000
Total Assets P 83,000 P 93,000
Less: Liabilities _____-0- _____-0-
Home Office Current Account P 83,000 P 93,000
5. a – refer to No. 4 for computations
6. a
Sales P 74,000
Less: Cost of goods sold:
SFHO…………………………………………………………… P67,680
Less: Inventory, ending……………………………………… 9,180 58,500
Gross profit…………………………………………………………… P 15,500
Less: Expenses – 6,820
Net Loss……………………………………………………………….. P 8,680
7. a
January 1, 20x6
Assets:Cash P 4,200
Inventory 9,180
Accounts receivable 12,800
Total Assets P 26,180
Less: Liabilities _____-0-
Home Office Current Account P 26,180
8. a – nominal accounts have zero beginning balance.
9. d
Branch
Current
H. Office
CurrentUnadjusted balance, 6/30/20x4 P 225,770 P 226,485*
Add (Deduct): Adjustments
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. Failure by the branch to record share in advertising 700
6. error by the home office to record remittance of Cebu 3,000 ________
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.
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10. c
Home Office Books
(Branch Current-
Dr. balance)
Branch Books
(Home Office Current –
Cr. balance)
Unadjusted balance P518,575 P452,276
Add (deduct) adjustments:In transit 10,500
Remittance ( 17,000)
Returns ( 775)
Cash in transit 25,000
Expenses - HO
Expenses – branch
Error
( 800)
________
12,000
_____224
Adjusted balance P 500,000 P 500,000
11. d
Home Office Books
(Branch Current-Dr. balance)
Branch Books
(Home Office Current – Cr. balance)
Unadjusted balance P515,000 P495,750
Add (deduct) adjustments:
Excess freight ( 750)
Cash in transit ( 11,000)
Returns ( 4,000)
Expenses – branch ________ 5,000
Adjusted balance P 500,000 P 500,000
12. c – refer to No. 11 for computations
13. a – refer to No. 11 for computations
14. d – refer to No. 11 for computations
15. 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 Current-
Dr. balance)
Branch Books
(Home Office Current –
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 Current-
Dr. balance)
Branch Books
(Home Office Current –
Cr. balance)
Unadjusted balance P590,000 P506,700
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Add (deduct) adjustments:
Remittance (40,000)
Returns (15,000)
Error by the branch 300
Expenses – branch ________ 28,000
Adjusted balance P 535,000 P 535,000
18. c
Home Office Books
(Branch Current-
Dr. balance)
Branch Books
(Home Office Current –
Cr. balance)
Unadjusted balance P150,000 P117,420
Add (deduct) adjustments:
In transit 37,500
HO A/R collected by br. 10,500
Supplies returned ( 4,500)
Error in recording Br. NI ( 1,080)
Cash sent to branch
to General Expense by HO 25,000 25,000
Adjusted balance P 179,920 P 179,920
19. d – refer to No. 18 for computation.
20. a
Home Office Books
(Branch Current- Dr.
balance)
Branch Books
(Home Office Current –
Cr. balance)
Unadjusted balance P40,000 P31,100
Add (deduct) adjustments:
In transit 5,800
HO A/R collected by br. 500Cash in transit 2,000 2,000
Error in recording Br. NI ( 3,600) _______
Adjusted balance P38,900 P38,900
21. a – refer to No. 20 for computations
22. a
Home Office Books
(Branch Current- Dr.
balance)
Branch Books
(Home Office Current –
Cr. balance)
Unadjusted balance P49,600 P44,00
Add (deduct) adjustments:Collection of branch A/R ( 800)
In transit 3,200
Purchase of furniture ( 1,200)
Return of excess merchandise ( 1,500)
Remittance ( 500) _______
Adjusted balance P46,400 P46,400
23. b – refer to No. 22 for computations
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24. (C)
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 90,000Less: 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 isnormally 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- XII1. P78,000
Branch A Branch BAssets:
Inventory, January 1 P 21,000 P 19,000
Imprest branch fund 2,000 1,500
Accounts receivable, January 1 55,000 43,500
Total Assets P 78,000 P 64,000
Less: Liabilities _____-0- _____-0-
Home Office Current Account P 78,000 P 64,000
2. P64,000 – refer to No. 1
3. P10,416
Sales ……….………………………………………………………… P 80,000
Less: Cost of goods sold:
Purchases……………………………..………………………. P 25,000
Shipments from home office……………………………… 56,216
Less: Inventory, ending (P3,391 + P7,625)…….………… 11,016 70,200
Gross profit…………………………………………………………… P 9,800
Add (deduct):
Expenses……………………………………………………….. ( 7,500)
Interest expense………………………………………………. ( 684)
Gain on sale…………………………………………………... 8,800
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Net Income……………………………………………………………….. P 10,416
4. P31,416 = P21,000 + P10,416
5. Zero, since it is a nominal account
6. P117,420
Home Office Books
(Branch Current-Dr. balance)
Branch Books
(Home Office Current – Cr. balance)
Unadjusted balance P150,000 P117,420
Add (deduct) adjustments:
In transit 37,500
HO A/R collected by br. 10,500
Supplies returned ( 4,500)
Error in recording Br. NI ( 1,080)
Cash sent to branch
to General Expense by HO 25,000 25,000
Adjusted balance P 179,920 P 179,920
7. P179,920 - refer to No. 6 for computation.8. c
9. a
10. P7,100
Sales P17,600Less: Cost of goods sold 10,500
Gross profit P 7,100
Less: Expenses
Salaries and commission [P1,750 + (5% x (P17,600 – P10,000) P 2,130
Rent expense 800
Advertising expense 325
Samples expense [(P5,000 – P2,000) x 1/6] 500
Advertising materials expense (3/5 x P1,250) 750
Depreciati0n expense [(P2,400 / 5 years) x 1/12] 40Miscellaneous expense ___600 __5,145
Net income P 1,955
11. P5,145 – refer to No. 10
12. P1,955 – refer to No. 10
Theories1. decentralized 11. False 21. False 31. E 41. A
2. Home Office Current 12. False 22. True 32. B 42. C
3. Branch Income 13. False 23. True 33. c 43. B
4. Home Office 14. True 24. True 34. d 44. D
5. intracompany 15. True 25. False 35. A 45. D
6. True 16. False 26. C 36. C 46. C
7. True 17. True 27. A 37. A 47. B
8. False 18. False 28. A 38. B 48. B
9. False 19. True 29. D 39. B 49. C
10, True 20. True 30. A 40. B 50. C
51. C
52. D
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