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 Shipments-Agency .
36,000
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

50,200

42,500

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

(g) Expenses
Cash

26,600

(h) Cash ..
Branch ...

53,400

(i) Retained Earnings .

Cash ...

10,000

105,000
122,500
113,600
124,000
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 ..

P22,500
P72,700

50,200
23,500

49,200

Gross Profit .
Expenses
Net loss ...

P16,800
18,200
P 1,400

BARTON CO.
Income Statement for Branch
For Year Ended December 31, 20x4
Assets

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
Less merchandise inventory, December 31 ..
Cost of goods sold .
Gross profit ..
Expenses ..
Net Income .

P171,000
P 40,120
145,000
P185,120
72,000

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

(a) Branch Books:

Expenses .
Accumulated Depreciation F&F.

650

650

Sales
Merchandise Inventory .
Income summary ..

66,000
23,500

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

90,900

Home Office
Income Summary

89,500

18,200
1,400

1,400

(b) Home Office Books

Expenses .
Accumulated Depreciation F&F.
Sales
Merchandise Inventory .
Shipments to Branch ..
Income summary ..
Income Summary
Merchandise Inventory
Purchases .
Expenses ..

1,180
1,180
105,000
48,500
50,200
203,700
190,250
40,120
122,500
27,630

Branch Income
Branch .

1,400
1,400

Income Summary ..
Branch Income

1,400

Income Summary ..
Retained Earnings ..

12,050
12,050

Problem III
(a) Branch Books:
Jan.

Cash .
Home Office

1,500

Shipments from home office .

Home Office

10,200

1,400

1,500

10,200

Home Office ..
Cash ..

900

Accts. Rec. Home office .

Home Office

2,600

Accts. Rec.-Home Office .

Sales ..

6,200

1-31

Cash ..
Accounts Receivable ..

2,600

1-31

Purchases .
Accounts Payable

3,000

1
1-31

Jan.

1-31

Accounts Payable .
Cash ..

1-31

Expenses ..
Cash .

1,450

1,250

Home Office
Accts. Rec.-Home Office .

150

Shipments from Home Office

Home Office .

1,250

1
1
1

1,450

1,250

1-31

Home Office
Cash
(b) Home Office Books:

2,600
3,000

Cash
Accts. Rec.-Home Office ...

1-31

2,600
6,200

1-31

1-31

Jan.

900

1,600

1,600
150
1,250

1,000
1,000

Branch .. 1,500
Cash
Branch .. 10,200
Shipments to Branch ..
Store Furniture and Fixtures Branch .. 3,000
Store Furniture and Fixtures ...

1,500
10,200
3,000

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

Store Furniture and Fixtures Branch ..

Branch

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

900

900
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 ............................
Accounts Receivable ..
Accts. Rec.-home office .
Merchandise Inventory
Merchandise in Transit .
Total assets
P37,200

P 1,100
3,600
850
9,800
600
P37,200

Accounts Payable . P 2,400

Accrued expenses .
400
Home Office
14,050
Total Liabilities .

EAGLE CO.
Income Statement for Branch
For Month Ended January 31, 20x4
Sales .
P
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 .
Gross Profit
P
Expenses

6,200

4,650
1,550
2,110

Net Loss ..

..

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

Assets

EAGLE CO.
Income Statement for Home Office
For Month Ended January 31, 20x4
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

31

Income Summary . 17,160

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

475
35

10,400
350
6,200
11,450
600
3,000

Expenses ..
31

Home Office ..
Income Summary ...

2,110
560
560

(b) Home Office Books:

31

Branch .
Shipments to Branch .

600

31

Branch .
Expenses ...

475

31

31

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)

31

Income Summary
Merchandise Inventory

46,000

31

Merchandise Inventory ..
Income Summary ..

44,500

31

Expenses .
Accrued Expenses .

31

Sales
Purchases
Expenses ..

31

Problem IV
1.

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

600

100

46,000
44,500

750

750

40,925
31,600
9,325

Branch Income .
Branch ..

560

31

Income Summary .
Branch Income ...

560

31

Income Summary .
Retained Earnings ..

3,665

560

Socrates Company
Home Office and Plato Branch
Reconciliation of Reciprocal Ledger Accounts
June 30, 20x4
Investment in

560
3,665

Account

Plato Branch
Ledger
Account
(Debit)
P85,000

Home Office
Ledger

Balances prior to adjustment

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.

(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.
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 ..

24,000

BRANCH
ACCOUNT
P 8,400

14,500

22,000

9,000

24,000

HOME OFFICE
ACCOUNT
P 9,735
615

2,500
90
P10,990

P10,350

640
P10,350

P10,350

615

2,500

615

2,500

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

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
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

P 77,150

Home
office
Account
P 56,450

600
4,400
____750
P77,900

_______
P61,450

540
16,000

_______
P 61360

___90
P 61,360

540
540
16,000
16,000
750
750
600
600
4,400
4,400
90

Shipments from Home Office

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

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
Beverly Hills Branch
Retained Earnings

215
215
65
65
1,225
1,225
310
310

Shipments to Beverly Hills Branch

Beverly Hills Branch

1,400

Brentwood Branch
Shipments to Brentwood Branch

1,400

Merchandise Returns from Branch In Transit Beverly

Hills Branch
Beverly Hills Branch

1,400
1,400
840
840

Allowance for Doubtful Accounts Beverly Hills Branch

Beverly Hills Branch
Problem VIII
1.
(b) Mdse. allowance by home
office
(f) Truck repairs charged by
home office

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

1,200
1,200

Home Office
(a) Charge for office furniture
350.00
by home office
(d) Charge for labor by home
293.00
office
(e) Charge for freight by
home office
(h) Proceeds from sale of
truck
643.00
1,556.5
0
1,229.5
0
Branch
(b) Mdse. allowance for
870.00
branch
325.00 (g) Proceeds from sale of
truck
433.00
_785.0
0
2,413.0
0
_______ Net Debit Total
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

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

300.00
475.00
______
775.00
1,638,00
0
_2,413.0
0
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

131,608.50
Add:

(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

P
131,690.00

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

_____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

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:

Branch B

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

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

January 1,
20x5

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
Less: Expenses
Net Loss..

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
6,820
P 8,680

7. a
Assets:
Cash
Inventory
Accounts receivable
Total Assets
Less: Liabilities
Home Office Current Account

January 1, 20x6
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
Unadjusted balance, 6/30/20x4
Add (Deduct): Adjustments
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

P 225,770

H. Office
Current
P 226,485*

(
(
(
3,000

3150
675)
90)
800)
700
________

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
Adjusted balance

Home Office Books

(Branch CurrentDr. balance)
P518,575

P2-07

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)
________
P 500,000

750)
5,000

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
Home Office Books
(Branch CurrentDr. balance)

Branch Books
(Home Office Current
Cr. balance)

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

P590,000

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
37,500

10,500
( 4,500)
( 1,080)
25,000
P 179,920

25,000
P 179,920

Home Office Books

(Branch Current- Dr.
balance)
P40,000

Branch Books
(Home Office Current
Cr. balance)
P31,100

19. d refer to No. 18 for computation.

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

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
23. b refer to No. 22 for computations
24. (C)

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

800)
3,200

_______
P46,400

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.

Quiz- XII
1. P78,000
Assets:
Inventory, January 1
Imprest branch fund
Accounts receivable, January 1
Total Assets
Less: Liabilities
Home Office Current Account

Branch A
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. P64,000 refer to No. 1

3. P10,416
Sales .
Less: Cost of goods sold:
Purchases...
Shipments from home office
Less: Inventory, ending (P3,391 + P7,625).
Gross profit
Add (deduct):
Expenses..
Interest expense.
Gain on sale...
Net Income..
4. P31,416 = P21,000 + P10,416

P 80,000
P 25,000
56,216
11,016
70,200
P 9,800
( 7,500)
(
684)
8,800
P 10,416

5. Zero, since it is a nominal account

6. P117,420

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

Home Office Books

(Branch CurrentDr. balance)
P150,000

Branch Books
(Home Office Current
Cr. balance)
P117,420
37,500

10,500
( 4,500)
( 1,080)
25,000
P 179,920

25,000
P 179,920

7. P179,920 - refer to No. 6 for computation.

8. c
9. a
10. P7,100
Sales

P17,600

Less: Cost of goods sold

Gross profit
Less: Expenses
Salaries and commission [P1,750 + (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
P 2,130
800
325
500
750
40
___600

__5,145
P 1,955

11. P5,145 refer to No. 10

12. P1,955 refer to No. 10

Theories
1.

decentralized

2.

Home Office Current

3.

Branch Income

4.

Home Office

5.

intracompany

6.

True

7.

True

8.

False

9.

False

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

False

21.

False

31.

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.

41
.
42
.
43
.
44
.
45
.
46
.
47
.
48
.
49

A
C
B
D
D
C
B
B
C

10
,

True

.
20
.

True

30.

40.

.
50
.
51
.
52
.

C
C
D