Dayag Solution Chapter 12

 

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)Acc ounts Receivable …………………… ……………………………… ……………..... …............. ................. .................. ............... ...... 50,000 50,000 Sales-Agency ………………………………………………………………. 50,000 (c)Cash (c)Ca sh ………………………… ……………………………………… ……………………… ………………... ……........... ................. ................. ................ .......... 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) Bran Branch ch Book Books: s: (a) (a) Ca Cash sh ………… ……………… ………… ………… ………… ………… ………… ………… ………… ………… …….. .. 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) Ac Acco coun unts ts Re Rece ceiv 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 O Off ffic ice e ……… ………………… …………… ………… ………………… …………… ……….. …….. Accounts Receivable …………………………..

53,40 3,400 0

(f (f)) Acc ccou ount ntss P Pay ayab able le ……… ………………… …………… ………… …………………. ………... .. Cash ……………………………………………………..

12,25 2,250 0

(g (g)) Fur urni nitu ture re & F Fix ixtu ture ress ……… …………… ……… …………… …………… ………… …………… Cash ……………………………………………………..

8,00 8,000 0

(h) (h) Ex Expe pens 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) Hom Home e Offic Office e Books: Books: (a (a)) Br Bran anc ch …… ……… ………… ………………… …………… …………… …………… ………… ……………. Cash …………………………………………………….

42,50 2,500 0 42,500

 

(b (b)) Br Bran anc ch …………… …………… …………… …………… …………… …………… ………… …………… Shipments to Branch ……………………… ………..

50,20 0,200 0

(c (c)) Acc ccou ount ntss R Rec ecei eiva vabl ble e ……… ………… ………… ……………… ………………. ………... .. Sales ……………………………………………………

105 05,,00 000 0

(d) Purchases ………………………………………………… ………. Accounts Payable ………………………………….

122,5 2,500

(e) Cas ash h ………… ………………………………… ……… ………… ……………….. Accounts Receivable ………………………………

113,6 3,600

(f) Acc ccou oun n ts P Pay aya able ……… ………… ……………………………… ………. Cash ……………………………………………………

124,0 4,000

(g (g)) Ex Expe pens nses es …… ………… ……… …………… …………… ………… ……………… ……………… ………… Cash ……………………………………………………

26,60 6,600 0

(h) Cas ash h ………… ………………………………… ……… ………… ……………….. 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 Dece mber 31, 20x4 Assets

Liabilities

Cash …………………………… Accounts Receivable ……… Merchandise Inv……………... Prepaid Expenses …………… Furnitures & Fixtures …. P 8,000 Less accum. Depr …… Total Assets ……………………

650

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 ffo or sa sale …… ………………………………… Less m me erchandise in inv, D De ecember 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 Me rcha hand ndis ise e inve invent ntor ory, y, Janu Januar ary y 1 ………… ……………… ………… ………… ………… ………. …. Pu Purc rcha hasses …… ……… …………… ……………… ……………… ……………… ………………… …………… …………. ………... .. Merc Me rcha hand ndis ise e av avail ailab able le fo forr sa sale le ………… ……………… ………… ………… ………… ………… ……… … Le Lesss sh ship ipme men nts to bran branc ch …… ………… ……… ………… ………………… ……………… ……………. ……... Merc Me rcha hand ndis ise e av avail ailab able le fo forr own sa sale le ………… ……………… ………… ………… ………… …….. .. Le Lesss merc mercha hand ndis ise e inve invent ntor ory, y, De Dec cembe 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,,50 500 0 P162 P162,6 ,620 20 50 50,,20 200 0 P112 P112,4 ,420 20 48 48,,50 500 0 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 Me rcha hand ndis ise e inve invent ntor ory, y, Ja Janu nuar ary y 1 ……… …………… ………… ………… ………… ………… …….. .. Pu Purc rcha hasses …… ……… …………… ……………… ……………… ……………… ………………… …………… ………… ………… Merc Me rcha hand ndis ise e av avail ailab able le fo forr sa sale le ………… ……………… ………… ………… ………… ………… ……… … Le Lesss mer merc chand handis ise e inv inven ento tory ry,, Dec Decem embe berr 3 31 1 ………… ……………… ………… ………. …... Cost of goods sold ………………………………………………………. Gross profit ………………………………………………………………………….. Expenses …… …………………………………………………………………………….. Net Income ………………………………………………………………………….

P171,000 P 40,1 40,120 20 145 45,,00 000 0 P185 P185,1 ,120 20 72 72,,00 000 0 113,120 P 5 57 7,880 45,830 P 12 1 2,050

 

(a) Bran Branch ch Book Books: s: Expenses ………………………………………………………………. Accumulated Depreciation – F& F&F……………………….

650 650

Sales ……………………………………………………………………

66,000

MerchaIn is e nvsu em nto tor y r… …… …… …… …… …… …… …… …… ……… …… …… ……… …… …… …… …... nd co mIe mra y… …… ……

23,50 ,500

Income Su Summary …… …………………………………………………… Shipments from Home Office …………………………… Purchases …………………………………………………… Expenses ……………………………………………………..

90,900

Home O Offfice …… ………………………………………………………… Income Summary …………………………………………

89,500

50,200 22,500 18,200 1,400 1,400

(b) (b) Ho Home me O Off ffic ice e Boo Books ks 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

Income Summary ………………………………………………….. Branch Income ……………………………………………

1,400

Income Summary ………………………………………………….. Retained Earnings ………………………………………..

12,050

1,180

203,700 190,250 40,120 122,500 27,630

1,400

12,050

Problem III (a) Bra Branch nch Books: Books: Jan.

1

1

Cash …………………………………………. Home Office ………………………

1,500

Shipments from home office ……………. Home Office ………………………

10,200

1,400

1,500

10,200

 

1

1

1-31

1-31

1-31

1-31

1-31

Jan.

1-31

Home Office ……………………………….. Cash ………………………………..

900

Accts. Rec . – Home office ………………. Home Office ………………………

2,600

Accts. R Re ec.-Home Of Office …… ………………. Sales ………………………………..

6,200

Cash ……………………………………….. Accounts Receivable …………..

2,600

Purchases …… … ………………………………. Accounts Payable ………………

3,000

Accounts P Pa ayable …… ………………………. Cash ………………………………..

1,450

Expenses …… ………………………………….. Cash ……………………………….

1,250

Cash …………………………………………

1,600

900

2,600

6,200

2,600

3,000

1,450

1,250

Accts. Rec.-Home Office ……... 1-31

1,600

Home Office ……………………………… Accts. Rec.-Home Office …….

150

Shipments from Home Office ………… Home Office …………………….

1,250

Home Office ……………………………… Cash ……………………………… (b) Hom Home e Offi Office ce Books: Books:

1,000

1-31

1-31

Jan.

1 1

1

150

1,250

1,000

Branch …………………………………….. 1,500 Cash ……………………………… Branch …… …………………………………….. 1 10 0,200 Shipments to Branch …………..

10,200

Sto torre Fu Furrniture and and Fixtu xture ress 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

Sto torre Fu Furrniture and and Fixtu xture ress Bra Branch ….. Branch ……………………………

1

900

Branch …… …………………………………… 2,600 Accounts Receivable ….........

900

2,600

 

11-31 31

1-31 1-31

11-31 31

11-31 31

1-31 1-31

1-31

1-31

1-31 1-31

Ac Acco coun unts ts Re Rece ceiv ivab able le ………… ……………… ……… … 34,6 34,600 00 Sales …… ………................................

34,600

Cash Cash ………… ……………… ………… ………… ………… ………… ………. …. 40,0 40,000 00 Accounts Receivable …………

40,000

Pu Purc rcha hase sess …… ………… ………… ………… ………… ………… ………. ….31 31,6 ,600 00 Accounts Receivable ………….

31,600

Ac Acco coun unts ts Paya Payabl ble e …… ………… ………… ………… ……… … 36,2 36,200 00 Cash ……………………………...

36,200

Accr Accrue ued d Ex Expe pens nses es Pa Paya yabl ble e ………… ………….. Expen Exp ense 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 Janua ry 31, 20x4 Assets

Liabilities

Cash …………............................ Accounts Receivable ………….. Accts. Rec.-home office ……….

P 1,100 3,600 850

Accounts Payable ………………. P 2,400 Accrued expenses ………………. 400 Home Office ……………………… 14,050

Merchandise Inventory ………… Merchandise in Transit …………. Total assets …………………

9,800 600 P37,200

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 ffrrom ho home of office …… ……………………………. 11,450 Shipments from home office in transit ………….......... 600 Mercmerchandise handise Availinv. abl able for S ale19X9 ……… ……… ……………….. ….. Less Dec 31, ……................P9,800

P15,050

P6 6,2 ,200 00

 

Merc Me rcha hand ndis ise e in tran transi sitt …… ………… ………… ………… ………… …….. .. 600 600 10,4 10,400 00 Cost o off Go Goods S So old …… ……………………………………………………………. Gr Gros osss Pro Profi fitt ………… …………… ………… ……………… ……………… ……………… ……………… ………………… ……………… ……………… ………… Exp Expenses ………………………………… ……………… ………………………………………………… Nett Lo Ne Losss ……… …………… ……… ……… ………… ………… ……… …………… ……………… ……………… ……………… ………………… ……………. …... ..

4,650 P 1,5 1,550 2,110 P 56 560 0

EAGLE CO. Balance Sheet for Home Office January Janua ry 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 3,315 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 Month Ended January January 31, 20x4 Sales ……………………………………………………………………………… Cost of goods sold: Merchandise in inventory, JJa anuary 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 m me erchandise iin nventory, Ja January 31 31 … …… …………… 44,500 Cost of goods sold …………………………………………………………… Gross oss Profit ………………………………………………………………………… Expenses …………………………………………………………………………… Net income from own ope perrati tio ons ……… ………………………………… ……… ………… ………. 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 Cas ash h ……… …………… ………… ……… …………. ………..…… .………. …. P 10,20 0,200 0 Acc ccou ount ntss Payab ayable le …… P30,7 30,700 00 AccounLess ts reallow ceivab le doubt……….. P38,450 for

Accrued Expenses ……

1,100

P 31,800

Ful Ful acco accou unt ntss ………. ………... 1,05 1,050 0 37 37,,40 400 0 Merchandise Inventory ……………….. 54,900 Store furn. & fixtures ………… P15,900 Less accum depr 4,735 11,165 To Tota tall a ass sset etss ……… …………… ………… ………… ………… ……… … P11 P113, 3,66 665 5

Stockholders Equity Capital Stocks …………P50,000 Retained earnings …… 31 3 1,865 81,865 Tota To tall lia liab. b. And And ssto tock ckho hold lder erss equi equity ty . P1 P113 13,6 ,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 Me rcha hand ndis ise e Inv Inven ento tory ry,, JJan anua uary ry 1 … ……… ………… ………. …. P4 P46, 6,00 000 0 Purchas ases es ………… ……………… …………………………………... 34,600 Merc Me rcha hand ndis ise e avai availa labl ble e for for sal sale e ………… ……………… ………. …... .. P8 P80, 0,60 600 0 Le Lesss mer merc chand handis ise e inv inven ento tory ry,, Jan Jan 3 31 1… ……… ………… …….... 54 54,9 ,900 00 Cost of goods sold ………………… … …… ……………............................... Gross pr profit …… …………………………………………………………………………... Expenses … …… …………………………………………………………………………… Net Income …………………………………………………………………………..

P 40 40,800

25,700 P1 15 5,100 11,435 P 3,665

(a) Bran Branch ch 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 Me rcha hand ndis ise e in in TTra rans nsit it ……… ……… ………… …………….. …….. Income Summary ……………………

475 35

9,800 60 600 0 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

11,450 600 3,000 2,110

560

(b) Hom Home e Offic Office e Books: Books: 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 … …… …………………………………….

750

46,000

44,500

Accrued Expenses …………………. 31

31

31

31

100

750

Sales …………………………………………… Purchases …………………………… Expenses ……………………………..

40,925

Branch Income ………………………………. Branch ………………………………..

560

Income Summary ……………………………. Branch Income ……………………...

560

Income Summary ……………………………. Retained Earnings …………………..

3,665

31,600 9,325

560

560

3,665

 

Problem IV 1. Socrates Socr ates Company Company Home Office and Plato Branch Reconciliation of Reciprocal Ledger Accounts June 30, 20x4

Balances prior to adjustment Add: Merchandise shipped to branch Less: Acquisition of office equipment by branch (carri (ca rried ed in in ac accou countin nting g re recor cords ds of of ho home me of office fice)) Collection of branch trade accounts receivable Payment of cash by branch Adjusted balances 2.

(a) (a)

Investment in Plato lato Bran Branch ch Ledger Account (Debit) P85,000

(14,50 (14,500) 0) (9,000) _______   P48,500

(22,000) P48,500

Acco Account untin ing g rreco ecord rdss of of h hom ome 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 Of Offi fic ce Ledger   Account (Credit) P33,500 24,000

14,500 14,500

22,000 22,000

Acco Accoun unti ting ng re reco cord rdss of br bran anch ch:: Home Office 9,000 Trade Accounts Receivable To record collection by home office of branch accounts receivable. Inventories in Transit

24,000

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 …………………. Collllec Co ecti tion on of Home Home offi office ce re rece ceiv ivab able le by Bran Branch ch Understatement o off br branch n ne et in income ffo or N No ov.. Deductions: Merchandise rre eturn to to ho home of office iin n tr transit … …… ………….

9,000

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 B Ba alances …… ………………………………………………

P10,350

(b) Branch Books: Shipments fr from Ho Home O Offfice -i-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 B Brranch – in TTrransit … …… …………. Branch …………………………………………………..

640

90

640

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. Ho Home me of offi fice 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 ____7 5 0 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

Shipments from Home Office – In Transit Home Office

31

Home Office Shipments from Home Office

750

600 600 4,400

4,400

90 90

Problem VII 1.

Balances before adjustments Adjustments: Additions: Corrected Corre cted b branch ranch income income fo forr 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

1,400 840 __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

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

1,400

1,400

Shipments to Brentwood Branch

1,400

Mercha Merc hand ndis ise e Re Retu turn rnss fr from om Bran Branch ch – In Tran Transi sitt – Be Beve verl rly y Hills Branch Beverly Hills Branch Allowance for Doubtful Accounts – Beverly Hills Branch Beverly Hills Branch

840 840 1,200 1,200

Problem VIII 1. (b) Mdse. allowance by home office

Home Office (a) Charge for office furniture 350.00 by home office

(f) Truck repairs charged by home office

293.00

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

(d) Charge for labor by home office (e) Charge for freight by home office (h (h)) Pr Pro oce cee eds from from sale ale of truc truck k

643.00 1,556.50 1,229.50 Branch (b) Mdse. allowance for  870.00 branch 325.00 (g) Proceeds from sale of truck  433.00 _785.00 2,413.00  _______ 2,413.00

Net Debit Total

Balan Balance ce in branc branch ha acc ccou ount nt per per h hom ome e off offic ice e boo book, k, Se Septe ptemb 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 iin n home home off offic ice e acco accoun untt per per br bran anch ch b boo ooks 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 P1 131, 31,69 690. 0.00 00 1,638.00 P 130,052.00 __1,556.50 P 13 131, 1,60 608. 8.50 50

 

 

2. Balance in home office account per branch books, September 30, 20x2 Add: dd: (a) Fa Faililu ure by bran branch ch to take take up fu fullll fu furn rnit 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

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

3. Balance in branch account per home office books,

_____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 b books ooks o off the branch branch wou would ld 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

P 41,000 3,000 49,000 P 93,000 _____-0P 93,000

5. a – refer to No. 4 for compu computations tations 6. a Sales

P 74,000

Less: Cost of goods sold: SFHO…………………………………………………………… Less: In Inventory, en ending……………………………………… Gross profit…………………………………………………………… profit…………………………………………………………… Less: Expenses – Net Loss………………………………………………………………..

P67,680 9,180

58,500 P 15,500 6,820 P 8,680

7. a January 1, 20x6 Assets: Cash Inventory Accounts receivable Total Assets

P 4,200 9,180 12,800 P 26,180

Less: Liabilities Home Office Current Account

_____-0P 26,180

8. a – nominal accounts accounts have ze zero ro beginning beginning balance. balance. 9. d Branch Current Unadjusted balance, 6/30/20x4 Add (Deduct): (Deduct): Adjus Adjustmen tments ts 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 Cebu

P 225,770

H. Office Current P 226,485*

( ( ( 3,000

3150 675) 90) 800) 700 ________  

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: IRnetm raitntsaitnce Returns Cash in transit Ex Expe pens nses es - HO Expen Exp ense sess – branc branch h Error  Adjusted balance

Home Office Books (Branch CurrentDr. balance) P518,575

Branch Books (Home (Ho me Office Office Cur Curren rentt –  Cr. bala balance nce)) P452,276

( 17,000) ( 775)

10,500 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 Offi Home Office ce Books (Branch CurrentDr. balance) P515,000

Branch Books (Home (Ho me Office Office Cur Curren rentt –  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 – ref refer er to to No. 11 for for compu computati tations ons 15. d - No entry entry sh should ould be made made in the books books of the h home ome office, office, since the freigh freightt sho should uld chargeable to the branch and the payment of the freight was made by the branch. 16. a Home Office Books Branch Books

Unadjusted balance Add (deduct) adjustments: Collection of branch receiv Shipments in transit Purchase by branch of office equipment Remittance Adjusted balance

(Branch CurrentDr. balance) P85,000

(Home (Ho me Office Office Cur Curren rentt –  Cr. bala balance nce)) P33,500 ( 9,000) 24,000

( 14,500) ( 22,000) P 48,500

_________ P 48,500

17. b Home Office Books (Branch CurrentUnadjusted balance

Dr. balance) P590,000

Branch Books (Home (Ho me Office Office Cur Curren rentt –  Cr. bala balance nce)) P506,700

 

be

 

Add (deduct) adjustments: Remittance Returns Error by the branch Expenses – branch Adjusted balance

(40,000) (15,000) ________

300 28,000

P 535,000

P 535,000

Home Office Books (Branch CurrentDr. balance) P150,000

Branch Books (Home (Ho me Office Office Cur Curren rentt –  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 (Branc h Curre Currentnt- Dr. balance) P40,000

Branch Books (Home (Ho me Office Office Cur Curren rentt –  Cr. bala balance nce)) P31,100

19. 19. d – re refe ferr 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

5,800 500 2,000 ( 3,600) P38,900

2,000 _______   P38,900

21. 21. a – re refe ferr to No. No. 20 fo forr 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 – ref refer er to to No. 22 for comp computa utation tionss

Home Office Books (Branch Curre (Branch Currentnt- Dr. balance) P49,600

Branch Books (Home (Home Of Offi fice ce Curr Curren entt –  Cr. bala balance nce)) P44,00 (

( 1,200) ( 1,500) ( 5 00) P46,400

800) 3,200

_______ P46,400

 

 

24. (C) Sales (P350,000 + P100,000)………………………………………………………….P P100,000)………………………………………………………….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 Le Lesss: Inve Invent ntor ory, y, en endi ding ng… ……… ………… ……… ………… ……………… ……………… ……… 90,0 90,000 00 36 360, 0,00 000 0 Gross profit…………………………………………………………… profit…………………………………………………………… P 90,000 Less: Les s:Salaries Expen Expenses ses –  commission…………………………………….. and Rent……………………………………………………………… Advertising Adver tising suppl supplies ies (P10, (P10,000 000 – P6,000)………… P6,000)…………………… ………… Other expenses………………………………………………. Net Loss………………………………………………………………..

P 70,000 20,000 4,000 5,000

99,000 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 period. 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,,00 000 0 Branch A

Branch B

Assets: Inventory, January 1 Imprest branch fund Accounts receivable, January 1

P 21,000 2,000 55,000

P 19,000 1,500 43,500

LTo etsa s:l LAiassbeiltitsies Home Office Current Account

P__7_8_,_0-000P 78,000

P__6_4_,_0-000P 64,000

2. P64, P64,000 000 – ref refer er to No. 1 3. P1 P10, 0,41 416 6 Sales …… … …….………………………………………………………… Less: Cost of goods sold: Purchases……………………………..……… ………………………. ……. Shipments from home office……………………………… Less: Inventory, ending (P3,391 + P7,625)…….………… Gross Gro ss 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 (Ho me Office Office Cur Curren rentt –  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. P1 P179 79,9 ,920 20 - refe referr to No. 6 for for co comp mput 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 a an nd co commission [[P P1,750 + ((5 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 P2 2,,130 800 325 500 750 40 ___600

__5,145 P 1,955

11. 11. P5 P5,1 ,145 45 – re refe ferr tto o No. No. 10 12. P1, P1,955 955 – ref refer er 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 Tr True Fa F alse Fa False Tr True

11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

False False False True True F Fa alse Tr True Fa F alse Tr True TTrrue

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.

A C B D D C B B C C C

52.

D