V- Adjustments, Closing, Worksheet, Separate and Combined

Statements
On December 31, 20x4, the end of a monthly period, the following trial balances were prepared for the
Spencer Co. and its branch. Merchandise was billed to the branch by the home office at 120% of cost.

Home Office Branch

Cash P 10, 350 P 2, 650

Accounts Receivable 26, 200 12, 850

Merchandise Inventory, Dec. 1 31, 500 14, 400

Furniture and Fixtures 8, 500 3, 000

Accumulated Depreciation Furniture

and Fixtures 2, 500 540

Unrealized Intercompany Inventory Profit 3, 700

Store Supplies 940 580

Branch 33, 760

Account Payable 35, 400 4, 200

Home Office 32, 040

Capital Stock 65, 000

Retained Earnings 6, 850

Sales 44, 850 20, 000

Shipment to Branch 8, 500

Purchases 27, 600 4, 100

Shipment from Home Office 10, 200

Advertising Expense 2, 850 2, 800

Salaries and Commission Expense 4, 250 2, 350

Miscellaneous Selling Expense 1, 850 1, 050

Rent Expense 2, 700 1, 500

Miscellaneous General Expense

(includes taxes and Insurance) 2, 600 700

P 159, 950 P 159, 950 P56, 780 P 56, 780

The following data were available on December 31:

Merchandise inventories: home office, cost P24, 200; branch, P14, 600, composed of
merchandise received from the home office (at billed price), P11, 700 and merchandise
purchased from outsiders (at cost), P2, 900.
Store supplies on hand: home office, P380; branch, P300.
Prepaid expenses (credit Miscellaneous General Expense): home office, P350; branch,
P120.
Accrued expenses (debit Miscellaneous General Expense): home office, P260; branch,
P105.
Depreciation of furniture and fixtures is recorded at 1% a month.
A cash remittance of P1, 500 had been recorded on the branch books, but the cash had
not yet been received by the home office and no entry has been made.
The home office had charge by the branch with the following expenses that have not yet
been recorded by the branch: taxes and insurance. P220.

Required:

1. Prepare individual statements for the branch and the home office for December 20x4.
2. Prepare a worksheet for combined statements.
3. Prepare combined statements for the branch and the home office.
4. Prepare the entries to adjust and close the books of (a) the branch and (b) the home
office.