Solution Chapter 12

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 Inventory - Agency .
36,000
2.
Sales.P 50,000
Less: CGS 36,000
GP.P 14,000
Less: Expenses (P4,500 + P2,250)..
6,750
Net income agency.P 7,250
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 ..

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
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
42,500
50,200
105,000
122,500
113,600
124,000
(g) Expenses
Cash
26,600
(h) Cash ..
Branch ...
53,400
(i) Retained Earnings .

Cash ...
10,000
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 ..
Gross Profit .
Expenses
Net loss ...
BARTON CO.
For Year Ended December 31, 20x4
Assets
P22,500
P72,700
50,200
23,500
49,200
P16,800
18,200
P 1,400
Liabilities & Stockholders Equity
Cash ..
P 23,200
Liabilities
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
Sales .......
Cost of goods sold:
Merchandise inventory, January 1 .
Purchases ...
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.
Sales .
Cost of goods sold:
Merchandise inventory, January 1 ..
Purchases
P171,000
P 40,120
145,000
P185,120
Less merchandise inventory, December 31 ..

Cost of goods sold .
Gross profit ..
Expenses ..
Net Income .
72,000
113,120
P 57,880
45,830
P 12,050
(a) Branch Books:

Expenses .
Accumulated Depreciation F&F.
Sales
Merchandise Inventory .
Income summary ..
650
650
66,000
23,500
89,500
Income Summary
Shipments from Home Office
50,200
Purchases
22,500
Expenses ..
90,900
18,200
Home Office
Income Summary
1,400
1,400
(b) Home Office Books

Expenses .
Accumulated Depreciation F&F.
1,180
1,180
Sales
Shipments to Branch ..
Income summary ..
105,000
48,500
50,200
203,700
Income Summary
Purchases .
Expenses ..
190,250
Branch Income
Branch .
1,400
40,120
122,500
27,630
Income Summary ..
Branch Income
1,400
Income Summary ..
Retained Earnings ..
12,050
1,400
1,400
12,050
Problem III
Journal and Adjusting Entries Home Office and Branch
Home Office Books
INTERCOMPANY
1/1 a
Branch Current . . . . . .
.
Cash . . . . . . . . . . . . . . .
1,500
1,500
Branch Books
INTER-OFFICE Transactions
Cash . . . . . . . . . . . . . . . . . . .
...
Home Office Current. . . . .
.
1,500
1,500
d.
Shipment to branch,
cost
Branch
Current . . . . . .
10,20
0
SFF - Branch
Store Furniture & Fixt
3,000
Acc. Depreciation SFF

Acc. Deprec. SFF
Br.
P3,000 x 10% x 2.5
yrs
750
SFF
Branch . . . . . . . . . .
Branch
Current . . . . . .
900
.
Accounts Receivable
10,20
0
Home Office Current . . . . . . .

.
Shipments from Home
Office
3,000
No entry eqpt accounts

maintained in the HO
books
750
No entry eqpt accounts

maintained in the HO
books
900
2,600
10,200
10,20
0

.
Cash . . . . . . . . . . . . . . . . .
..
Accounts Receivable - HO
2,600
900
900
2,600
Home Office Current. . . . .
2,600
1/1 1/31
Transaction with Outsiders
Accounts Receivable . . .
34,60
0
34,60
0
Sales.. . . . . . . . . . . . . . .
Cash. . . . . . . . . . . . . . .
...
Accounts Receivable
40,00
0
Purchases . . . . . . . . . . .
.
Accounts Payable . .
31,60
0
Accounts Payable . . . . .
36,20
0
Cash. . . . . . . . . . . . .
..
Accrued expenses . . . . .
250
Expenses. . . . . . . . . . . .
. .
Cash. . . . . . . . . . . . .
..
8,950
1/1 1/31
Allowance for D/A. . . . .
Accounts Receivable . . .
6,200
Sales.. . . . . . . . . . . . . . .
6,200
2,600
40,00
0
Cash . . . . . . . . . . . . . . . . . . .
...
Accounts
Receivable . . . . .
3,000
31,60
0
Purchases. . . . . . . . . . . . . . . .
..
Accounts
Payable. . . . . . . .
Accounts Payable . .. . . . . . . .
1,450
36.20
0
2,600
3,000
Cash. . . . . . . . . . . . . . .
Expenses . .. . . . . . . . . . . . . .
..
Cash. . . . . . . . . . . . . . .. . .
..
1,450
1,250
1,250
9,200
Intercompany / INTER-OFFICE Transactions
150
Branch
Current . . . . . .
150
Shipment to branch
,cost
Branch
Current . . . . . .
1,250
Cash. . . . . . . . . . . . . . .
. .
Branch
Current . . . . . .
1,000
1,250
1,000
Cash . . . . . . . . . . . . . . . . . . .
...
Accts. Rec.
HO.
1,600

.
Accts. Rec.
HO.
150

.
Shipments from Home
Office
1,250

.
1,000
Cash. . . . . . . . . . . . . . . . . . .
1,600
150
1,250
1,000
Adjusting Entries
a.
b.
Shipment to branch,
cost
Branch
Current . . . . . .
600
..
475
600
475
Expenses. . . . . . . . . . .
c.
600
Expenses. . . . . . . . . . . . . . .
....
Home Office Current . . . . .
.
475
600
475
Branch Current.. . . . . .
35
Expenses. . . . . . . . . . . . . . .
35
..
....
Acc. Deprec. SFF
35
Home Office Current . . . . .
35
Br.
.
P3,000/10 years x 1/12 = P25 (depreciation for one month; Asset life, 10 years); P900 / 7.5 years,
remaining life = P120 x 1/12= P10)
Expenses. . . . . . . . . . . .
100
..
Acc. Deprec. SFF
[(P15,000 P3,000)/10 x 1/12]
d.
e.

.
Shipments from Home
Office
Included in closing entries

Expenses. . . . . . . . . . . .
..
Accrued expenses. . .
100
750
Expenses. . . . . . . . . . . . . .
750
350
Accrued expenses. . .
350
Closing Entries
Sales. . . . . . .. . . . . . . .
...
Merch. inventory,
ending
Shipments to branch
34,60
0
44,50
0
12,05
0
Merch. Inv. ,
beg.
6,200
Merch. inventory, ending

(P9,800 + P600)
46,00
0
31,60
0
Purchases. . . . . . . . . .
Expenses (9,200
250
- 475 + 100 + 750)
..
Income
Summary
Income Summary. . . . . . .
10,400
560
Merch. Inv. , beg.
Purchases. . . . . . . . . .
Branch Income
Summary
Branch
Current.
560
Income
Summary..
Branch Income Sum
560
Income
Summary..
Retained
Earnings..
Sales. . . . . . .. . . . . . . . . . .
9,325
Shipments from HO
4,225
(P10,200 + P1,250
+P600)
Expenses (1,250 + 475
+ 35 + 350).
560

.
Income
Summary . . . . . . . .
560
3.665
3,665
EAGLE CO.
Balance Sheet for Branch
January 31, 20x4
3,000
12,050
2,110
560
560
Assets
Liabilities
Cash ............................
Accts. Rec.-home office .
Merchandise in Transit .
Total assets
P15,950
P 1,100
3,600
850
9,800
600
P15,950
Accounts Payable . P 1,550

Accrued expenses .
350
Home Office 14,050
Total Liabilities .
EAGLE CO.
For Month Ended January 31, 20x4
Sales .
P 6,200
Cost of Goods Sold:
Merchandise inventory, beginning..P
0
Add: Purchases .
3,000
Shipments from home office (P11,450 +P600, in-transit)
12,050
Merchandise Available for Sale ..
P 15,050
Less: Merchandise inv. Dec 31, 19x4 (P9,800 + P600).
10,400
Cost of Goods Sold .
4,650
Gross Profit
P 1,550
Expenses
2,110
Net Loss, from own operations
P 560
EAGLE CO.
Balance Sheet for Home Office
January 31, 20x4
Assets
Cash
Accounts Receivable P34,000
Less allowance for doubtful accounts ..
1,050
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.
Sales
P 34,600
Cost of goods sold:
Merchandise inventory, January 1 ..
P46,000
Purchases
31,600
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
EAGLE CO.
Assets
Liabilities 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
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 ..
EAGLE CO.
Combined Balance Sheet
P 40,800
25,700
P 15,100
11,435
P 3,665
January 31, 20x4

Assets
Cash
Accounts Receivable
P38,450
Less: Allowance for doubtful accounts
1,050
Store furniture and fixtures P15,900
Less: Accumulated depreciation ..
4,735
Total Assets
Liabilities
Accounts Payable ..
P30,700
Accrued Expenses ..
1,100
Total Liabilities ..
Stockholders Equity
Capital Stock
Retained earnings ..
Total stockholders equity
Total liabilities and stockholders equity
P 10,200
37,400
54,900
_ 11,165
P113,665
P 31,800
P50,000
31,865
81,865
P113,665
Problem IV
1.
Socrates Company
Home Office and Plato Branch
Reconciliation of Reciprocal Ledger Accounts
June 30, 20x4
Investment in
Plato Branch
Ledger
Account
Account
(Debit)
Balances prior to adjustment
P85,000
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.
Home Office
Ledger
(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)
Accounting records of branch:

Home Office
22,000
9,000
14,500
22,000
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
Branch
Retained Earnings .
Merchandise Returns from Branch in Transit .
Branch ..
9,000
24,000
24,000
BRANCH
ACCOUNT
P 8,400
HOME OFFICE
ACCOUNT
P 9,735
615
2,500
90
P10,990
P10,350
640
P10,350
P10,350
615
615
2,500
2,500
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:
P 77,150
Home
office
Account
P 56,450
600
4,400
____750
P77,900
_______
P61,450
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
Shipments from Home Office
540
16,000
_______
P 61360
___90
P 61,360
540
540
16,000
16,000
750
750
600
600
4,400
4,400
90
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
P 59,365
Home
Office
Account
P 57,525
1,225
310
_______
P 60,900
____215
P 57,740
65
215
1,400
840
Uncollectible accounts of branch

Corrected Balances
__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
215
215
Home Office
Accounts Receivable
65
65
(b) Entries to bring home office books up to date:

Beverly Hills Branch
Beverly Hills Branch Income
Retained Earnings
1,225
1,225
310
310
Shipments to Beverly Hills Branch

1,400
Brentwood Branch
Shipments to Brentwood Branch
1,400
1,400
Merchandise Returns from Branch In Transit Beverly

Hills Branch
Allowance for Doubtful Accounts Beverly Hills Branch
1,400
840
840
1,200
1,200
Problem VIII
1.
(b) Mdse. allowance by home
office
(f) Truck repairs charged by
home office
Net credit Total
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
780.00
866.00
78.50
475.00
2,199.5
0
_______
2,199.5
0
(a) Purchase of office furniture

for branch
(c) Branch charge for interest
(d) Branch charge for labor
(e) Branch charge for freight
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
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
Add:
P
131,608.50
(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
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:
Inventory, December 31
Imprest branch fund
Accounts receivable, December 31
Total Assets
Less: Liabilities
P 19,000
2,000
70,000
P 91,000
-0P 91,000
Branch B
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
5. a refer to No. 4 for computations
P 37,000
3,000
43,000
P 83,000
_____-0P 83,000
January 1,
20x5
P 41,000
3,000
49,000
P 93,000
_____-0P 93,000
6. a
Sales
Less: Cost of goods sold:
SFHO
Less: Inventory, ending
Gross profit
Less: Expenses
Net Loss..
7. a
P 74,000
P67,680
9,180
58,500
P 15,500
6,820
P
8,680
January 1, 20x6
Assets:
Cash
Inventory
Accounts receivable
Total Assets
Less: Liabilities
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
H. Office
Current
Unadjusted balance, 6/30/20x4

P 225,770
P 226,485*
Add (Deduct): Adjustments
1 Erroneous recording of branch equipment
3150
2. Insurance premium recorded twice
(
675)
3. Erroneous recording of freight
(
90)
4. Discount on merchandise
(
800)
5. Failure by the branch to record share in advertising
700
6. error by the home office to record remittance of
3,000
________
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
Home Office Books

(Branch CurrentDr. balance)
P518,575
Branch Books
(Home Office Current
Cr. balance)
P452,276
10,500
( 17,000)
(
775)
(
800)
________
P 500,000
Home Office Books
25,000
12,000
_____224
P 500,000
Branch Books
Cr. balance)
Unadjusted balance
Excess freight
Cash in transit
Returns
Expenses branch
Adjusted balance
P515,000
P495,750
(
750)
( 11,000)
( 4,000)
________
5,000
P 500,000
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
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
Unadjusted balance
Remittance
Returns
Error by the branch
Expenses branch
Adjusted balance
Home Office Books

P590,000
Branch Books
Cr. balance)
P506,700
(40,000)
(15,000)
________
300
28,000
P 535,000
P 535,000
Home Office Books

P150,000
Branch Books
Cr. balance)
P117,420
18. c
Unadjusted balance
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
37,500
10,500
( 4,500)
( 1,080)
25,000
P 179,920
25,000
P 179,920
19. d refer to No. 18 for computation.

20. a
Unadjusted balance
In transit
Cash in transit
Adjusted balance
Home Office Books

(Branch Current- Dr.
balance)
P40,000
Branch Books
Cr. balance)
P31,100
5,800
500
2,000
( 3,600)
P38,900
2,000
_______
P38,900
Home Office Books

(Branch Current- Dr.
balance)
P49,600
Branch Books
Cr. balance)
P44,00
21. a refer to No. 20 for computations

22. a
Unadjusted balance
Collection of branch A/R
In transit
Purchase of furniture
Return of excess merchandise
Remittance
Adjusted balance
(
( 1,200)
( 1,500)
(
500)
P46,400
800)
3,200
_______
P46,400
23. b refer to No. 22 for computations

24. (C)
Sales (P350,000 + P100,000).P 450,000
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
Branch A
Assets:
Inventory, January 1
Imprest branch fund
Accounts receivable, January 1
Total Assets
Less: Liabilities
P 21,000
2,000
55,000
P 78,000
_____-0P 78,000
2. P64,000 refer to No. 1

3. P10,416
Sales .
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
5. Zero, since it is a nominal account
6. P117,420
Unadjusted balance
In transit
Supplies returned
Cash sent to branch
to General Expense by HO
Adjusted balance
Home Office Books

P150,000
7. P179,920 - refer to No. 6 for computation.

8. c
9. a
10. P7,100
Sales
Less: Cost of goods sold
Gross profit
Less: Expenses
10,500
( 4,500)
( 1,080)
25,000
P 179,920
Branch B
P 19,000
1,500
43,500
P 64,000
_____-0P 64,000
P 80,000
P 25,000
56,216
11,016
70,200
P 9,800
( 7,500)
(
684)
8,800
P 10,416
Branch Books
Cr. balance)
P117,420
37,500
25,000
P 179,920
P17,600
10,500
P
7,100
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
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
10
,
True
11
.
12
.
13
.
14
.
15
.
16
.
17
.
18
.
19
.
20
.
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.
True
30.
40.
41
.
42
.
43
.
44
.
45
.
46
.
47
.
48
.
49
.
50
.
51
.
52
.
A
C
B
D
D
C
B
B
C
C
C
D

Solution Chapter 12

Uploaded by

Copyright:

Available Formats

Solution Chapter 12

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Solution Chapter 12

Uploaded by

Copyright:

Available Formats

Chapter 12

(f) Cost of Goods Sold-Agency 36,000

(b) Shipments from Home Office

(c) Accounts Receivable .

(e) Home Office ..

(f) Accounts Payable ...

(g) Furniture & Fixtures

(b) Home Office Books:

(c) Accounts Receivable ...

(f) Accounts Payable .

(i) Retained Earnings .

Cost of Goods Sold:

Liabilities & Stockholders Equity

Less merchandise inventory, December 31 ..

(a) Branch Books:

(b) Home Office Books

Acc. Depreciation SFF

Home Office Current . . . . . . .

No entry eqpt accounts

No entry eqpt accounts

Home Office Current . . . . . . .

Home Office Current. . . . .

Transaction with Outsiders

Allowance for D/A. . . . .

Intercompany / INTER-OFFICE Transactions

Home Office Current . . . . . . .

Home Office Current . . . . . . .

Home Office Current . . . . . . .

Home Office Current . . . . . . .

Included in closing entries

Merch. inventory, ending

Merch. Inv. , beg.

Home Office Current . . . . . . .

Accounts Payable . P 1,550

January 31, 20x4

Accounting records of branch:

Trade Accounts Receivable

Overstatement of branch profit for 20x0 on home

Shipments from Home Office In Transit

Uncollectible accounts of branch

2. (a) Entries to bring branch books up to date:

(b) Entries to bring home office books up to date:

Shipments to Beverly Hills Branch

Merchandise Returns from Branch In Transit Beverly

Net credit Total

(a) Purchase of office furniture

(a) Failure by branch to take up full furniture

Deduct: (d) Recognition by branch of excess labor

Multiple Choice Problem

3. d incidentally, the entry in the books of the branch would be as follows:

8. a nominal accounts have zero beginning balance.

Unadjusted balance, 6/30/20x4

Home Office Books

c refer to No. 11 for computations

Home Office Books

Home Office Books

19. d refer to No. 18 for computation.

Home Office Books

Home Office Books