Home Office and Branch Accounting 102

Problem 1

 Prepare Journal, adjusting and closing entries

1) Home office acquired P72,000 in equipment to be used and recorded by the branch
2) Home Office paid P12,000 to lease a building for the last 6 months of this year, This cost was charged to the branch
3) Inventory costing P320,000 was shipped to branch by the Home office at a billed price of P400,000
 Home office separately records all of its unrealized profits
4) Branch Paid P44,000 for various operating expenses
5) Branch sold 75% of the inventory received, collecting P420,000 in cash
6) Branch transferred P240,000 in cash to home office
Home Books Branch Books

1) Investment in Branch 72,000.00 PPE 72,000.00

Cash 72,000.00 Home Office 72,000.00

2) Investment in Branch 12,000.00 Expenses 12,000.00

Cash 12,000.00 Home office 12,000.00

3) Investment in Branch 400,000.00 Shipment from Home office 400,000.00

Shipment to Branch 320,000.00 Home Office 400,000.00
Allowance for Markup 80,000.00

4) Expenses 44,000.00
Cash 44,000.00

5) Cash 420,000.00
Sales 420,000.00

Cost of Goods Sold 300,000.00 (400k x 75%, num 3)

Inventory 300,000.00

6) Cash 240,000.00 Home Office 240,000.00

Investment in Branch 240,000.00 Cash 240,000.00

Closing and Adjusting Entries

Sales 420,000.00
Investment in Branch 64,000.00 Expenses 56,000.00
Income summary-Branch 64,000.00 Cost of Goods Sold 300,000.00
Income Summary 64,000.00

Allowance for Markup 60,000.00 Income Summary 64,000.00

Income summary-Branch 60,000.00 Home Office 64,000.00
(80k x 75%)