Beruflich Dokumente
Kultur Dokumente
ACCT 501
Objectives of this Chapter
SMALDNO COMPANY
Working paper for combined Financial
Statements of Home office and Mason
Branch
For Year Ended December 31,1999
(Perpetual Inventory System: Billing
above Cost)
Sales 80,000
Income Summary 10,500
Cost of Goods Sold 67,500
Operating Expenses 23,000
To reduce allowance to
amount by which ending
inventories of branch exceed
cost.
Accounting for Branches
Branch Closing Entries and Home office
Adjusting and Closing Entries (when billing at
above the cost) (contd.)
Home Office Adjusting and Closing Entries (contd.)
receivable from
home office 120,000 165,500 cr
Cash sent to home
office 113,000 52,500 cr
Operating expenses
Retained earnings,
Dec. 31, 1999 (117,000) (117,000)
Net Income (from
income statement
above) (85,000) (10,000) (d) (37,500) (132,500)
Dividends declared 60,000 27,500 60,000
Retained earnings,
Dec. 31, 2000 (to
balance sheet below) 85,000 10,000 189,500
Accounting for Branches
Periodic Inventory System (contd.)
Example: (contd.)
Adjusted Trial Balances
Eliminations Combined
Balance Sheet Home Mason
Office Branch
Dr (Cr) Dr (Cr) Dr (Cr) Dr (Cr)
CGS=22,500+120,000-30,000
Accounting for Branches
Branch Closing Entries and Home Office Adjusting
and Closing entries for the home office (with billing at
above the cost and using a periodic inventory system):
(contd.)
(2)Sales 150,000
CGS 112,500
Operating expenses 27,500
Income Summary 10,000
2.Inventory 8,000
Home Office 8,000
$ 49,500 (dr.)
- 3,000 (cr.)
+ 2,000 (dr.)
$ 48,500 (dr.)
$ 41,500 (cr.)
- 1,000 (dr.)
+ 8,000 (cr.)
$ 48,500 (cr.)
Branch:
Inventories 8,000
Freight-in (or Inventories) 600
Home Office 8,600