Advance Accounting 2 Chapter 12
Advance Accounting 2 Chapter 12
Advance Accounting 2 Chapter 12
MULTIPLE CHOICE
12-1: 12-2: d. This is recorded when the working fund is replenished. c. Sales Cost of goods sold: Purchases Merchandise inventory, end Gross profit Expenses Net income (loss) 12-3: b Sales Cost of goods sold (P70,000 / 140%) Gross profit Less: Samples (P8,000 P6,000) Expenses Net income 12-4: a Sales Cost of goods sold Gross profit Expenses (P9,000 + P4,500) Net income 12-5: 12-6: 12-7: 12.8 a a c a Shipment of merchandise to home office Equipment sent to home office Expenses assigned to branch by the home office Cash remittance to home office Home office account balance P 80,000 50,000 8,000 (40,000) P 98,000 P 100,000 72,000 P 28,000 13,500 P 14,500 P 70,000 50,000 P 20,000 P 2,000 2,800 4,800 P 15,200 P 700,000 P800,000 180,000 620,000 P 80,000 198,000 P (118,000)
12-9: d 12-10: a Home Office account balance before closing, Dec. 32, 1008 P 35,000 Net income (loss) Sales P147,000 Cost of cost goods sold Shipment to branch P135,000 Inventory, 12/31 18,500 116,500 Gross profit P 30,500 Expenses 13,500 17,000 Home Office account balance (Investment in Branch account balance) P 52,000 Shipment to Branch account has no beginning balance, because this was closed at the end of 2008. 12-11: b Petty cash fund Accounts receivable Inventory Home Office account balance 12-12: d (Branch Books) Home Office P 21,320 7,280 ( 400) P 28,200 (Home Office Books) Investment in Branch P 38,600 (10,400) P 28,200 Jan. 1, 2008 P 6,000 86,000 74,000 P166,000 Jan. 1, 2009 P 6,000 98,000 82,000 P186,000
Unadjusted balances, Dec. 31 Remittance in transit Shipment in transit Cash collections of home office Adjusted balances, Dec. 31 12-13: a
Unadjusted balance Investment in Branch account, 12/31 Charge for advances by president Erroneous entry for merchandise allowance Share in advertising expense Unadjusted balance Home Office account, 12/31
12-14: a Unadjusted balances, 12/31 Shipment in transit Collection of HO A/R by branch Error in recording of branch profit Returns of merchandise in transit Adjusted balances, 12/31 12-15: a (Branch Books) Home Office Unadjusted balances P25,550 Error in recording shipment to Cavity branch (12,000) Error in recording shipment to Tagaytay branch 15,000 Branch AR collected by home office Merchandise returns in transit ( 1,200) Error in recording branch profit ( 3,600) Adjusted balances P23,750 12-16: c Unadjusted balance- Investment in Branch account Remittance in transit Shipment in transit Expenses allocated Error in recording remittance Error in recording shipments Unadjusted balance Home Office account ( Branch Books) Home Office P 44,000 20,000 5,000 (3,000) 9,000 P 75,000 (Branch Books) Home Office Branch Unadjusted balances Branch AR collected by Home Office Shipments in transit Acquisition of furniture Merchandise returns Cash remittance in transit Adjusted balances P 440,000 ( 8,000) 32,000 P 496,000 (12,000) (15,000) ( 5,000) P 464,000 P 75,000 (Home Office Books) Investment in (Home Office Books) Investment in Branch P27,350 (3,000) P23,750 P 85,000 (10,000) (20,000) ( 5,000) 3,000 ( 9,000) P 44,000 (HomeOffice Books) Investment in Branch P 85,000 (10,000) (Branch Books) Home Office P 97,350 6,150 (Home Office Books) Investment in Branch P 84,000 25,000 900 ( 6,400) P103,500
P103,500
Unadjusted balances, Remittance in transit Shipment in transit Expenses allocated Unrecorded HO collection of AR Error in recording shipments Adjusted balances 12.17 a
P 464,000
PROBLEMS
Problem 12-1
Home Office Books 1. Investment in branch Cash 2. Investment in branch Shipment to branch 3. No entry 30,000 30,000 75,000 75,000 Cash Home office Shipment from home office Home office Purchases Accounts payable Accounts receivable Sales 2,000 2,000 75,000 75,000 10,000 10,000 125,000 125,000 Branch Books 30,000 30,000
4. No entry
Home office 2,000 Shipment from home office Cash Accounts receivable 105,000
2,000
7. No entry
8. No entry
7,500 7,500
10. Cash Investment in branch 11. Cash Investment in branch 12. Investment in branch Branch income
65,000 65,000
65,000 3,000 3,000 10,000 10,000 Home office Accounts receivable Sales Inventory, end 73,000 Purchases 10,000 3,000 3,000
HO
Salaries 10,000 Rent Utilities 12,500 Home office 10,000 10,000 2,000 Other operating expenses
Problem 12-2 a. Books of the Branch 1. Cash Merchandise inventory Home office Merchandise inventory Accounts payable Accounts receivable Sales Cost of goods sold Merchandise inventory Cash Accounts receivable 4. Advertising expense Sales commission Other expense Cash Accounts payable Home office Cash 40,000 65,000 45,000 150,000 370,000 120,000 490,000 200,000 350,000 550,000 400,000 400,000 650,000 650,000 425,000 425,000 600,000 600,000
2. 3.
5.
b.
Manila Sales Naga Branch Income Statement Year Ended December 31, 2008 Sales Cost of goods sold Gross profit Expenses: Advertising expense Sales commissions Other expenses Net income P650,000 425,000 225,000 P40,000 65,000 45,000
150,000 P 75,000
c.
December 31, 2008 Cash Accounts receivable Merchandise inventory Total assets Problem 12-3 Home Office Books (1) Adjusting Entries
a. Investment in branch Cash b. Investment in branch Shipment to branch c. Accounts receivable Sales d. Purchases Accounts payable e. Cash Accounts receivable 63,750 63,750 75,300 73,300 157,500 157,500 183,750 183,750 170,400 170,400 Cash Home office Shipment from HO Home office Accounts receivable Sales 75,300 75,300 99,000 99,000 63,750 63,750
Branch Books
Purchases 33,750 Accounts payable 33,750 Cash 80,100 Accounts receivable 80,100 80,100 18,375 18,375 80,100
Home office Cash f. Accounts payable Cash g. Expenses Cash Furniture & fixtures branch Investment in branch h. Cash Investment in branch 186,000 186,000 39,900 39,900 12,000 12,000 80,100 80,100 Expenses Cash i. Retained earnings Cash 15,000 15.000 Home office Cash Accounts payable Cash -
12,000 12,000
27,000 27,000
Acc. Depn Br. F & F l. Prepaid expenses Expenses m. Expenses Accrued expenses 375
Branch Books
Sales 99,000 Merchandise inv., 12/31 35,250 Income summary 2,100 Purchases 33,750 Shipment from HO 75,300 Expenses 27,300 Home office 2,100 Income summary
2,100
3.
Purchases Shipments from home office Goods available for sale Merchandise inventory, 12/31 Gross profit Expenses Net income (loss)
Cebu Company Home Office Balance Sheet December 31, 2008 Assets Cash Accounts receivable Merchandise inventory, 12/31 Prepaid expenses Furniture and fixtures Less: Accumulated depreciation Branch furniture and fixtures Less: Accumulated depreciation Investment in branch Total assets Liabilities and Stockholders Equity Liabilities Accrued expenses Accounts payable Total liabilities Stockholders Equity Capital stock Retained earnings Total liabilities and stockholders equity Cebu Company Branch Balance Sheet December 31, 2008 Assets Cash Accounts receivable Merchandise inventory, 12/31 Prepaid expenses Total assets Liabilities and Capital Accounts payable Home office Total liabilities and capital P 6,375 18,000 35,250 1,125 P61,650 P 450 15,375 P61,650 P 34,800 28,575 72,750 3,075 P30,000 8,370 P12,000 975 21,630 11,025 45,825 P217,680
4.
Combined Financial Statements Cebu Company Combined Income Statement Year Ended December 31, 2008 Sales Cost of sales Merchandise inventory, 1/1 Purchases Goods available for sale Merchandise inventory, 12/31 Gross profit Expenses Combined net income Cebu Company Balance Sheet December 31, 2008 Assets Cash Accounts receivable Merchandise inventory Prepaid expenses Furniture and fixtures Less: accumulated depreciation Total assets Liabilities and Stockholders Equity Accrued expenses Accounts payable Capital stock Retained earnings Total liabilities and stockholders equity P 41,175 47,475 108,000 4,200 P42,000 9,345 32,655 P233,505 P 2,475 47,325 75,000 108,705 P233,505 P256,500 P 60,180 217,500 P277,680 108,000
Problem 12-4 Branch Books (a) and (b) Closing Entries Sales 145,000 Inventory, 12/31 60,000 Inventory, 1/1 Shipments from HO Expenses Income summary Sales 560,000 Inventory, 12/31 90,000 Shipments to branch 145,000 Inventory, 1/1 Purchases Expenses Income summary Home Office Books
22,000 22,000
22,000 22,000
Branch income 22,000 Income summary 22,000 Income summary 142,000 Retained earnings 142,000
CG Corporation Combined Statement Working Paper Year Ended December 31, 2008 Eliminations Home Office Branch 7,000 29,000 18,000 (2) 70,000 95,000 540,000 145,000 20,000 219,000 (1)145,000 110,000 150,000 371,000 27,000 54,000 144,000 560,000 145,000 930,000 90,000 4,000 70,000 145,000 (1)145,000 219,000 60,000 215,000 215,000 142,000 142,000 371,000 (150,000) 31,000 (2) 70,000 54,000 144,000 (705,000) Debit Credit Income Statement Dr (Cr) Balance Sheet 43,000 83,000 63,000
Debits Cash Accounts receivable Inventory, 1/1 Investment in branch Equipment (net) Purchases Shipments from HO Expenses Total debits Inventory 12/31 (BS) Total assets Credits Accounts payable Home Office Capital stock Retained earnings, 1/1 Sales Shipments to branch Total credits Inventory, 12/31 (IS) Net income Total liabilities & equity 1. 2.
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Problem 12-5
(1) Oro Company Working Paper for Combined Statements Year Ended December 31, 2008 Home Office Debits Cash Notes receivable Accounts receivable (net) Inventories Furniture & fixtures (net) Investment in Branch Cost of goods sold Operating expenses Totals Credits Accounts payable Common stock Retained earnings Home Office Sales Totals Net Income
(1) To eliminate shipments (2) To eliminate reciprocal accounts.
63,000 10,500 120,600 143,700 72,150 124,050 300,750 104,250 939,000 61,500 300,000 37,500 540,000 939,000
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9,900 9,900
Branch loss 9,900 Investment in Branch Income summary Branch loss 9,900
9,900 9,900
Problem 12-6 a. Investment in Branch account (Home Office Books) Unadjusted balance Error in recording cash transfer, April 8 Cash transfer recorded in subsequent year, Dec. 31 Error in recording allocated depreciation, Dec. 31 Adjusted balance Home Office account (Branch Books) Unadjusted balance Error in recording salary allocation, April 5 Error in recording inventory transfer, July 6 Unrecorded allocated depreciation, Dec. 31 Adjusted balance b. Adjusting Entries Home Office Books
Other income Investment in branch Rizal Cash Investment in branchRizal Investment in branch Accumulated depn 6,000 6,000 45,000 45,000 15,000 15,000 Depreciation expense Home office 3,000 3,000 Home office 12,000 Shipments from HO 12,000
P138,200 ( 45,000) ( 15,000) 6,000 P 84,200 P(93,000) ( 200) 12,000 ( 3,000) P(84,200)
Branch Books
Salary expense Home office 200 200
Problem 12-7
a. Investment in Branch account (Home Office Books) Unadjusted balance, Dec. 31 Cash remittance in transit Merchandise returns in transit Adjusted balance, Dec. 31 Home Office account (Branch Books) Unadjusted balance, Dec. 31 Error in recording expense Shipment in transit P166,400 (30,000) (12,000) P124,400 P103,200 7,200 24,000
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8,000 ( 18,000) P124,400 Branch Books Shipment from HO 24,000 Supplies 8,000 Expenses 7,200 Accounts receivable 18,000 Home office 21,200
b.
Adjusting Entries
Home Office Books Cash 30,000 Shipment to branch 12,000 Investment in branch 42,000
Problem 12-8 (1) Reconciliation Statement (Home Office Books) (Branch Books) Investment in Branch Home Office Unadjusted balances, 1/31 Advertising charged to branch Home office AR collected by branch Shipment in transit Error in recording receipt of merchandise Understatement of depreciation Remittance in transit, 1/31 (2) Adjusting Entries Home Office Books
Retained earnings Cash Accounts receivable Investment in branch 432 12,800
P59,720 600
P 47,088
Branch Books
Advertising 480 Shipments from HO 3,520 600 Shipment from HO 12,632 Home office 180 3,820
Problem 12-9 (1) Branch Books Adjusting Entries Shipment from home office Operating expenses (P4,200 + P3,900) Home office Closing Entries Sales Inventory, 12/31 (P64,580 + P57,600) Inventory, 1/1 Shipment from HO (P623,200 + P57,600) Operating expenses Income summary 778,200 122,180 47,800 680,800 54,790 116,990 57,600 8,100 65,700
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116,990 116,900
(2)
Home Office Books Accounts receivable Investment in branch Cash (P20,000 + P19,200) Investment in branch Branch income 470 330 800 116,990 116,900
(3)
Reconciliation Statement Home Office Books Branch Books (Investment in Branch) (Home Office) P 206,344 P 140,974 20,000 57,600 8,100 116,990 116,990 ( 470) ( 19,200) P 323,664 P 323,664
Unadjusted balances, 12/31 Error in recording remittance to branch Shipment in transit Expenses charged to branch Branch net income Freight erroneously charged to branch Cash remittance in transit to HO Adjusted balances, 12/31 Problem 12-1111 a. P 2,000
Sales (P 27,000 + P 33,000 + P 26,000) . Cost of Goods Sold (P 36,000 + P 18,000) . Gross Profit Rent Expense .. Property Tax Expense Depreciation Expense Miscellaneous Expense . General Corporate Expense Net Income b. P 180,000 Initial Transfers .
P 86,000 (54,000) P 32,000 P 4,000 5,000 4,000 11,000 6,000 (30,000) P 2,000
P 188,000
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June Inventory Shipment .. Property Tax Payment .. September Inventory Shipment Expense Allocation .. Cash Transfer ... Balance in Home Office/Branch Accounts (correct) ..
c.
Journal Entries Tarlac Branch 1/10/08 Cash . Inventory . Equipment Home Office Rent Expense Cash . Cash .. Sales Cost of Goods Sold .. Inventory . Cash . Sales ... Cost of Goods Sold . Inventory Miscellaneous Expenses . Cash ... Inventory . Home office ... Property Tax Expense . Home Office .. Inventory Home Office . 30,000 36,000 122,000 188,000 4,000 4,000 27,000 27,000 18,000 18,000 33,000 33,000 18,000 18,000 7,000 7,000 18,000 18,000 5,000 5,000 26,000 26,000
1/20/08 2/1/08
4/1/08
10/1/08
Cash Sales . Cost of Goods Sold .. Inventory .. 11/1/08 Miscellaneous Expenses ... Cash . 12/22/08 Home Office Cash . 12/31/08 Depreciation Expense . Accumulated depreciation .. 12/31/08 General Corporate Expenses Home Office ..
26,000 26,000 18,000 18,000 4,000 4,000 63,000 63,000 4,000 4,000 6,000 6,000
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d.
TARLAC BRANCH Balance Sheet December 31, 2008 Assets Cash . Inventory . Equipment ... Accumulated Depreciation . Total Assets Equity Home Office* .. P 38,000 26,000 P 122,000 (4,000) 118,000 P 182,000 P 182,000
*Home office balance is P 180,000 as computed in Part b plus the P 2,000 net income for the period.
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