Problem III

(a) Branch Books:

Jan.

1,500

Shipments from home office .

Home Office

10,200

1,500

10,200

Home Office ..
Cash ..

900

Accts. Rec. Home office .

Home Office

2,600

1-31

Accts. Rec.-Home Office .

Sales ..

6,200

1-31

Cash ..
Accounts Receivable ..

2,600

1-31

Purchases .
Accounts Payable

3,000

1-31

Accounts Payable .
Cash ..

1-31
Jan.

Cash .
Home Office

1-31

Expenses ..
Cash .
Cash
Accts. Rec.-Home Office ...

900
2,600
6,200
2,600
3,000

1,450
1,450
1,250

1,250

1,600
1,600

1-31

Home Office
Accts. Rec.-Home Office .

150

1-31

Shipments from Home Office

Home Office .

1,250

1-31

Home Office
Cash

150
1,250

1,000
1,000

(b) Home Office Books:

Jan.

1
1

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

Store Furniture and Fixtures Branch .. 3,000

Store Furniture and Fixtures ...

Accumulated Depr. Store F&F ..

750
Accumulated Depr. Store Furniture

1,500
10,200
3,000

And Fixtures, Branch ..

750
Calculation of depreciation: 2.5years at P300, (10% of
P3,000), or P750
1

Store Furniture and Fixtures Branch ..

Branch

900
900

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

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 ............................
2,400
Accounts Receivable ..
400
Accts. Rec.-home office .
14,050
Merchandise Inventory
Merchandise in Transit .
Total assets
P37,200

P 1,100

Accounts Payable . P

3,600

Accrued expenses .

850

Home Office

9,800
600
P37,200

Total Liabilities .

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
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
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
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 stockholders equity
81,865
Total liabilities and stockholders equity
P111,765
AGLE CO.
Income Statement for Home Office

P 9,100

3,315

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
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 P30,700
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

475
35

10,400
350
6,200

31

Income Summary . 17,160

Shipments from Home Office .
Ship. From Home Office in Trans .
Purchases
Expenses ..

31

Home Office ..
Income Summary ...

560

11,450
600
3,000
2,110
560

(b) Home Office Books:

31

Branch .
Shipments to Branch .

600

31

Branch .
Expenses ...

475

31

Branch .
Accumulated Depreciation, Store
Furniture and Fixtures Branch ..

31

31

600
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)
Income Summary
Merchandise Inventory

46,000

31

Merchandise Inventory ..
Income Summary ..

44,500

31

Expenses .
Accrued Expenses .

100

46,000
44,500

750
750

31

31

Sales
Purchases
Expenses ..

40,925
31,600
9,325

Branch Income .
Branch ..

560

31

Income Summary .
Branch Income ...

560

31

Income Summary .
Retained Earnings ..

3,665

560
560
3,665