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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 Inventory - Agency .
36,000
2.
Sales.P 50,000
Less: CGS 36,000
GP.P 14,000
Less: Expenses (P4,500 + P2,250)..
6,750
Net income agency.P 7,250
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
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

42,500
50,200
105,000
122,500
113,600
124,000

(g) Expenses
Cash

26,600

(h) Cash ..
Branch ...

53,400

(i) Retained Earnings .


Cash ...

10,000

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 ..
Gross Profit .
Expenses
Net loss ...
BARTON CO.
Balance Sheet for Home Office
For Year Ended December 31, 20x4
Assets

P22,500
P72,700

50,200
23,500
49,200
P16,800
18,200
P 1,400

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

P171,000
P 40,120
145,000
P185,120

Less merchandise inventory, December 31 ..


Cost of goods sold .
Gross profit ..
Expenses ..
Net Income .

72,000
113,120
P 57,880
45,830
P 12,050

(a) Branch Books:


Expenses .
Accumulated Depreciation F&F.
Sales
Merchandise Inventory .
Income summary ..

650

650
66,000
23,500
89,500

Income Summary
Shipments from Home Office
50,200
Purchases
22,500
Expenses ..

90,900

18,200

Home Office
Income Summary

1,400
1,400

(b) Home Office Books


Expenses .
Accumulated Depreciation F&F.

1,180
1,180

Sales
Merchandise Inventory .
Shipments to Branch ..
Income summary ..

105,000
48,500
50,200
203,700

Income Summary
Merchandise Inventory
Purchases .
Expenses ..

190,250

Branch Income
Branch .

1,400

40,120
122,500
27,630

Income Summary ..
Branch Income

1,400

Income Summary ..
Retained Earnings ..

12,050

1,400
1,400
12,050

Problem III
Journal and Adjusting Entries Home Office and Branch
Home Office Books
INTERCOMPANY
1/1 a

Branch Current . . . . . .
.
Cash . . . . . . . . . . . . . . .

1,500
1,500

Branch Books
INTER-OFFICE Transactions

Cash . . . . . . . . . . . . . . . . . . .
...
Home Office Current. . . . .
.

1,500
1,500

d.

Shipment to branch,
cost
Branch
Current . . . . . .

10,20
0

SFF - Branch
Store Furniture & Fixt

3,000

Acc. Depreciation SFF


Acc. Deprec. SFF
Br.
P3,000 x 10% x 2.5
yrs

750

SFF
Branch . . . . . . . . . .
Branch
Current . . . . . .

900

Branch Current . . . . . .
.
Accounts Receivable

10,20
0

Home Office Current . . . . . . .


.
Shipments from Home
Office

3,000

No entry eqpt accounts


maintained in the HO
books

750

No entry eqpt accounts


maintained in the HO
books

900
2,600

10,200
10,20
0

Home Office Current . . . . . . .


.
Cash . . . . . . . . . . . . . . . . .
..
Accounts Receivable - HO

2,600

900
900
2,600

Home Office Current. . . . .

2,600

1/1 1/31

Transaction with Outsiders

Accounts Receivable . . .

34,60
0
34,60
0

Sales.. . . . . . . . . . . . . . .
Cash. . . . . . . . . . . . . . .
...
Accounts Receivable

40,00
0

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

31,60
0

Accounts Payable . . . . .

36,20
0

Cash. . . . . . . . . . . . .
..
Accrued expenses . . . . .

250

Expenses. . . . . . . . . . . .
. .
Cash. . . . . . . . . . . . .
..

8,950

1/1 1/31

Allowance for D/A. . . . .

Accounts Receivable . . .

6,200

Sales.. . . . . . . . . . . . . . .

6,200
2,600

40,00
0

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

3,000

31,60
0

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

1,450

36.20
0

2,600

3,000

Cash. . . . . . . . . . . . . . .
Expenses . .. . . . . . . . . . . . . .
..
Cash. . . . . . . . . . . . . . .. . .
..

1,450
1,250
1,250

9,200

Intercompany / INTER-OFFICE Transactions

150

Branch
Current . . . . . .

150

Shipment to branch
,cost
Branch
Current . . . . . .

1,250

Cash. . . . . . . . . . . . . . .
. .
Branch
Current . . . . . .

1,000

1,250

1,000

Cash . . . . . . . . . . . . . . . . . . .
...
Accts. Rec.
HO.

1,600

Home Office Current . . . . . . .


.
Accts. Rec.
HO.

150

Home Office Current . . . . . . .


.
Shipments from Home
Office

1,250

Home Office Current . . . . . . .


.

1,000

Cash. . . . . . . . . . . . . . . . . . .

1,600

150

1,250

1,000

Adjusting Entries
a.

b.

Shipment to branch,
cost
Branch
Current . . . . . .

600

Branch Current . . . . . .
..

475

600

475

Expenses. . . . . . . . . . .
c.

600

Expenses. . . . . . . . . . . . . . .
....
Home Office Current . . . . .
.

475

600

475

Branch Current.. . . . . .
35
Expenses. . . . . . . . . . . . . . .
35
..
....
Acc. Deprec. SFF
35
Home Office Current . . . . .
35
Br.
.
P3,000/10 years x 1/12 = P25 (depreciation for one month; Asset life, 10 years); P900 / 7.5 years,
remaining life = P120 x 1/12= P10)
Expenses. . . . . . . . . . . .
100
..
Acc. Deprec. SFF
[(P15,000 P3,000)/10 x 1/12]

d.
e.

Home Office Current . . . . . . .


.
Shipments from Home
Office

Included in closing entries


Expenses. . . . . . . . . . . .
..
Accrued expenses. . .

100

750

Expenses. . . . . . . . . . . . . .
750

350

Accrued expenses. . .

350

Closing Entries
Sales. . . . . . .. . . . . . . .
...
Merch. inventory,
ending
Shipments to branch

34,60
0
44,50
0
12,05
0

Merch. Inv. ,
beg.

6,200

Merch. inventory, ending


(P9,800 + P600)
46,00
0
31,60
0

Purchases. . . . . . . . . .
Expenses (9,200
250
- 475 + 100 + 750)
..
Income
Summary

Income Summary. . . . . . .

10,400
560

Merch. Inv. , beg.

Purchases. . . . . . . . . .

Branch Income
Summary
Branch
Current.

560

Income
Summary..
Branch Income Sum

560

Income
Summary..
Retained
Earnings..

Sales. . . . . . .. . . . . . . . . . .

9,325

Shipments from HO

4,225

(P10,200 + P1,250
+P600)
Expenses (1,250 + 475
+ 35 + 350).

560

Home Office Current . . . . . . .


.
Income
Summary . . . . . . . .

560
3.665
3,665

EAGLE CO.
Balance Sheet for Branch
January 31, 20x4

3,000

12,050
2,110
560
560

Assets

Liabilities

Cash ............................
Accounts Receivable ..
Accts. Rec.-home office .
Merchandise Inventory
Merchandise in Transit .
Total assets
P15,950

P 1,100
3,600
850
9,800
600
P15,950

Accounts Payable . P 1,550


Accrued expenses .
350
Home Office 14,050
Total Liabilities .

EAGLE CO.
Income Statement for Branch
For Month Ended January 31, 20x4
Sales .
P 6,200
Cost of Goods Sold:
Merchandise inventory, beginning..P
0
Add: Purchases .
3,000
Shipments from home office (P11,450 +P600, in-transit)
12,050
Merchandise Available for Sale ..
P 15,050
Less: Merchandise inv. Dec 31, 19x4 (P9,800 + P600).
10,400
Cost of Goods Sold .
4,650
Gross Profit
P 1,550
Expenses
2,110
Net Loss, from own operations
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 stockholders 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
EAGLE CO.
Income Statement for Home Office
For Month Ended January 31, 20x4
Assets
Liabilities 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 ..
EAGLE CO.
Combined Balance Sheet

P 40,800

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

January 31, 20x4


Assets
Cash
Accounts Receivable
P38,450
Less: Allowance for doubtful accounts
1,050
Merchandise Inventory .
Store furniture and fixtures P15,900
Less: Accumulated depreciation ..
4,735
Total Assets
Liabilities
Accounts Payable ..
P30,700
Accrued Expenses ..
1,100
Total Liabilities ..
Stockholders Equity
Capital Stock
Retained earnings ..
Total stockholders equity
Total liabilities and stockholders equity

P 10,200
37,400
54,900
_ 11,165
P113,665

P 31,800

P50,000
31,865
81,865
P113,665

Problem IV
1.
Socrates Company
Home Office and Plato Branch
Reconciliation of Reciprocal Ledger Accounts
June 30, 20x4
Investment in
Plato Branch
Ledger
Account
Account
(Debit)
Balances prior to adjustment
P85,000
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.

Home Office
Ledger
(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.

14,500

22,000

9,000

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 ..
Branch
Retained Earnings .
Merchandise Returns from Branch in Transit .
Branch ..

24,000
24,000

BRANCH
ACCOUNT
P 8,400

HOME OFFICE
ACCOUNT
P 9,735
615

2,500
90
P10,990

P10,350

640
P10,350

P10,350

615
615
2,500
2,500
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

P 77,150

Home
office
Account
P 56,450

600
4,400
____750
P77,900
540
16,000

_______
P61,450

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
Shipments from Home Office

_______
P 61360

___90
P 61,360

540
540
16,000
16,000
750
750
600
600
4,400
4,400
90
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
2. (a) Entries to bring branch books up to date:

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

Correction in Income of Prior Periods


Home Office

215

Home Office
Income Summary

215

215
215

Home Office
Accounts Receivable

65
65

(b) Entries to bring home office books up to date:


Beverly Hills Branch
Beverly Hills Branch Income
Beverly Hills Branch
Retained Earnings

1,225
1,225
310
310

Shipments to Beverly Hills Branch


Beverly Hills Branch

1,400

Brentwood Branch
Shipments to Brentwood Branch

1,400

1,400

Merchandise Returns from Branch In Transit Beverly


Hills Branch
Beverly Hills Branch

1,400
840

Allowance for Doubtful Accounts Beverly Hills Branch


1,200
Beverly Hills Branch
Problem VIII
1.
Home Office
(b) Mdse. allowance by home
(a) Charge for office furniture
office
350.00
by home office
(f) Truck repairs charged by
(d) Charge for labor by home
home office
293.00
office
(e) Charge for freight by
home office
(h) Proceeds from sale of
truck
643.00
Net credit Total

(a) Purchase of office furniture


for branch
(c) Branch charge for interest

1,556.5
0
1,229.5
0
Branch
(b) Mdse. allowance for
870.00
branch
325.00 (g) Proceeds from sale of
truck

840
1,200

780.00
866.00
78.50
475.00
2,199.5
0
_______
2,199.5
0

300.00
475.00

(d) Branch charge for labor


(e) Branch charge for freight

433.00
_785.0
0
2,413.0
0
_______

______
775.00
Net Debit Total

1,638,00
0
_2,413.0
0

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

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
Add:

P
131,608.50

(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
Add credit to branch account made in error for proceeds from sale
of truck
Corrected interoffice balance, September 30, 20x2
4.

P
131,690.00
_____475.00
P
132,265.00

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:
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

Branch B
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

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

January 1,
20x5
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

Less: Expenses
Net Loss..
7. a

6,820
P

8,680

January 1, 20x6
Assets:
Cash
Inventory
Accounts receivable
Total Assets
Less: Liabilities
Home Office Current Account

P 4,200
9,180
12,800
P 26,180
_____-0P 26,180

8. a nominal accounts have zero beginning balance.


9. d
Branch
Current

H. Office
Current

Unadjusted 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
3,000
________
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

Home Office Books


(Branch CurrentDr. balance)
P518,575

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)
________

750)
5,000

Adjusted balance

P 500,000

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

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

Home Office Books


(Branch CurrentDr. balance)
P590,000

Branch Books
(Home Office Current
Cr. balance)
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

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

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
Add (deduct) adjustments:
In transit
HO A/R collected by br.
Cash in transit
Error in recording Br. NI
Adjusted balance

P40,000

P31,100
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

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

800)
3,200

_______
P46,400

23. b refer to No. 22 for computations


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 90,000
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.

Theories
1.

decentralized

11

False

21.

False

31.

41

2.

Home Office Current

3.

Branch Income

4.

Home Office

5.

intracompany

6.

True

7.

True

8.

False

9.

False

10
,

True

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

False

22.

True

32.

False

23.

True

33.

True

24.

True

34.

True

25.

False

35.

False

26.

36.

True

27.

37.

False

28.

38.

True

29.

39.

True

30.

40.

.
42
.
43
.
44
.
45
.
46
.
47
.
48
.
49
.
50
.
51
.
52
.

C
B
D
D
C
B
B
C
C
C
D

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