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Advanced-Accounting-Part 2-Dayag-2015-Chapter-12
Advanced-Accounting-Part 2-Dayag-2015-Chapter-12
Problem I
(a)Working Fund – Agency ……………………………… ……………………….. 5,000
Cash …………………………………………………………………………. 5,000
(b)Accounts Receivable …………………………………..................................... 50,000
Sales-Agency ………………………………………………………………. 50,000
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:
BARTON CO.
Balance Sheet for Branch
December 31, 20x4
Assets Liabilities
BARTON CO.
Income Statement for Branch
For Year Ended December 31, 19X6
BARTON CO.
Income Statement for Home Office
For Year Ended December 31, 20x4
BARTON CO.
Income Statement for Home Office
For Year Ended December 31, 20x4
Problem III
Journal and Adjusting Entries – Home Office and Branch
Home Office Books Branch Books
INTERCOMPANY / INTER-OFFICE Transactions
1/1 a Branch Current . . . . . . . 1,500 Cash . . . . . . . . . . . . . . . . . . . . . . 1,500
Cash . . . . . . . . . . . . . . . 1,500 Home Office Current. . . . . . 1,500
b Shipment to branch, cost 10,200 Home Office Current . . . . . . . . 10,200
Branch Current . . . . . . 10,200 Shipments from Home Office 10,200
c SFF - Branch 3,000 No entry – eqpt accounts
Store Furniture & Fixt 3,000 maintained in the HO books
Acc. Depreciation – SFF 750 No entry – eqpt accounts
Acc. Deprec. SFF – Br. 750 maintained in the HO books
P3,000 x 10% x 2.5 yrs
SFF – Branch . . . . . . . . . . 900 Home Office Current . . . . . . . . 900
Branch Current . . . . . . 900 Cash . . . . . . . . . . . . . . . . . . . 900
d. Branch Current . . . . . . . 2,600 Accounts Receivable - HO 2,600
Accounts Receivable 2,600 Home Office Current. . . . . . 2,600
Expenses. . . . . . . . . . . . . . 100
Acc. Deprec. – SFF 100
[(P15,000 – P3,000)/10 x 1/12]
d. Included in closing entries
e. Expenses. . . . . . . . . . . . . . 750 Expenses. . . . . . . . . . . . . . 350
Accrued expenses. . . 750 Accrued expenses. . . 350
Closing Entries
Sales. . . . . . .. . . . . . . . . . . 34,600 Sales. . . . . . .. . . . . . . . . . . 6,200
Merch. inventory, ending 44,500 Merch. inventory, ending
Shipments to branch 12,050 (P9,800 + P600) 10,400
Merch. Inv. , beg……. 46,000 Income Summary. . . . . . . 560
Purchases. . . . . . . . . . 31,600 Merch. Inv. , beg……. 0
Expenses (9,200 – 250 Purchases. . . . . . . . . . 3,000
- 475 + 100 + 750)….. 9,325 Shipments from HO
Income Summary…… 4,225 (P10,200 + P1,250 +P600) 12,050
Expenses (1,250 + 475
+ 35 + 350)……………. 2,110
EAGLE CO.
Balance Sheet for Branch
January 31, 20x4
Assets Liabilities
EAGLE CO.
Income Statement for Branch
For Month Ended January 31, 20x4
Assets
Cash …………………………………………………………………… P 9,100
Accounts Receivable ……………………………………………… P34,000
Less allowance for doubtful accounts ……………….. 1,050 32,950
Merchandise Inventory ……………………………………………. 44,500
Store furniture and fixtures ………………………………………… P12,000
Less accumulated depreciation ………………………. 3,950 8,050
Store furniture and fixtures-branch ……………………………… P 3,900
Less accumulated depreciation ……………………… 785 3,315
Branch office ………………………………………………………... 14,050
Total Assets …………………………………………………………… P111,765
Liabilities
EAGLE CO.
Income Statement for Home Office
For Month Ended January 31, 20x4
EAGLE CO.
Income Statement for Home Office
For Month Ended January 31, 20x4
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 doubt-
Ful 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
EAGLE CO.
Combined Balance Sheet
January 31, 20x4
Assets
Cash …………………………………………………………………… P 10,200
Accounts Receivable ……………………………………………… P38,450
Less: Allowance for doubtful accounts ………………………… 1,050 37,400
Merchandise Inventory ……………………………………………. 54,900
Store furniture and fixtures ………………………………………… P15,900
Less: Accumulated depreciation ……………………………….. 4,735 _ 11,165
Total Assets …………………………………………………………… P113,665
Liabilities
Accounts Payable …………………………………………….. P30,700
Accrued Expenses …………………………………………….. 1,100
Total Liabilities ………………………………………………….. P 31,800
Stockholders’ Equity
Problem IV
1.
Socrates Company
Home Office and Plato Branch
Reconciliation of Reciprocal Ledger Accounts
June 30, 20x4
Investment in
Plato Branch Home Office
Ledger Ledger
Account Account
(Debit) (Credit)
Balances prior to adjustment P85,000 P33,500
Add: Merchandise shipped to branch 24,000
Less: Acquisition of office equipment by branch
(carried in accounting records of home office) (14,500)
Collection of branch trade accounts receivable (9,000)
Payment of cash by branch (22,000) _______
Adjusted balances P48,500 P48,500
Problem V
((a) BRANCH HOME OFFICE
ACCOUNT ACCOUNT…
Balances before Adjustments ……………………………………….. P 8,400 P 9,735
Adjustments:
Additions:
Merchandise in transit to branch …………………. 615
Collection of Home office receivable by Branch 2,500
Understatement of branch net income for Nov.. 90
P10,990 P10,350
Deductions:
Merchandise return to home office in transit ……………. 640
Corrected Balances ……………………………………………… P10,350 P10,350
Branch …………………………………………………………… 90
Retained Earnings ……………………………………. 90
Branch Books:
Jan. 31 Advertising Expense 600
Home Office 600
31 Home Office 90
Shipments from Home Office 90
Problem VII
1.
Branch Home Office
Account Account
Balances before adjustments P 59,365 P 57,525
Adjustments:
Additions:
Corrected branch income for January (P1,440 – P215)
1,225
Understatement of branch paid by home office for
December 310
Expenses of branch paid by home office _______ ____215
P 60,900 P 57,740
Deductions:
Collection by home office of branch receivable 65
Correction of branch income for January 215
Merchandise transferred to Brentwood branch but
incorrectly charged by Beverly Hills branch 1,400
Merchandise returns to home office in transit 840
Uncollectible accounts of branch __1,200 _______
Corrected Balances P 57,460 P 57,460
Home Office 65
Accounts Receivable 65
Branch
(a) Purchase of office furniture for (b) Mdse. allowance for
branch 870.00 branch 300.00
(c) Branch charge for interest 325.00 (g) Proceeds from sale of 475.00
truck
(d) Branch charge for labor 433.00
(e) Branch charge for freight _785.00 ______
2,413.00 775.00
_______ Net Debit Total 1,638,000
2,413.00 _2,413.00
Balance in branch account per home office book, September 30, 20x2 P 131,690.00
Deduct net debit total per home office books for transactions that involve
discrepancies 1,638.00
P 130,052.00
Add net credit total per branch books for transaction that involve
discrepancies __1,556.50
Balance in home office account per branch books, September 30, 20x2 P 131,608.50
2.
Balance in home office account per branch books,
September 30, 20x2 P 131,608.50
Add: (a) Failure by branch to take up full furniture charges P 90.00
(b) Recognition by branch of excess merchandise
allowance 50.00
(c) Failure by branch to recognize charge by home
office for interest 325
(e) Failure by branch to recognize full freight
charges 706.50
(f) Truck repairs charge to home office account in
error 293.00 ___1,464.50
P 133,073.00
Deduct: (d) Recognition by branch of excess labor charges 433.00
(h) Credit entry to home office made in error on
sale of truck __475.00 ___908.00
Corrected interoffice balance, September 30, 20x2 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 _____475.00
Corrected interoffice balance, September 30, 20x2 P 132,265.00
4.
Office Furniture 90.00
Merchandise allowances 50.00
Home office interest charges payable 250.00
Interest expense 75.00
Freight In 706.50
Repairs on truck 293.00
Labor 433.00
Trucks 475.00
Home Office 556.50
4. c
January 1,20x4 January 1, 20x5
Assets:
Inventory P 37,000 P 41,000
Petty cash fund 3,000 3,000
Accounts receivable 43,000 49,000
Total Assets P 83,000 P 93,000
Less: Liabilities _____-0- _____-0-
Home Office Current Account P 83,000 P 93,000
5. a – refer to No. 4 for computations
6. a
Sales P 74,000
Less: Cost of goods sold:
SFHO…………………………………………………………… P67,680
Less: Inventory, ending……………………………………… 9,180 58,500
Gross profit…………………………………………………………… P 15,500
Less: Expenses – 6,820
Net Loss……………………………………………………………….. P 8,680
7. a
January 1, 20x6
Assets:
Cash P 4,200
Inventory 9,180
Accounts receivable 12,800
Total Assets P 26,180
Less: Liabilities _____-0-
Home Office Current Account P 26,180
10. c
Home Office Books Branch Books
(Branch Current- (Home Office Current –
Dr. balance) Cr. balance)
Unadjusted balance P518,575 P452,276
Add (deduct) adjustments:
In transit 10,500
Remittance ( 17,000)
Returns ( 775)
Cash in transit 25,000
Expenses - HO ( 800)
Expenses – branch 12,000
Error ________ _____224
Adjusted balance P 500,000 P 500,000
11. d
Home Office Books Branch Books
(Branch Current- (Home Office Current –
Dr. balance) Cr. balance)
Unadjusted balance P515,000 P495,750
Add (deduct) adjustments:
Excess freight ( 750)
Cash in transit ( 11,000)
Returns ( 4,000)
Expenses – branch ________ 5,000
17. b
Home Office Books Branch Books
(Branch Current- (Home Office Current –
Dr. balance) Cr. balance)
Unadjusted balance P590,000 P506,700
Add (deduct) adjustments:
Remittance (40,000)
Returns (15,000)
Error by the branch 300
Expenses – branch ________ 28,000
18. c
Home Office Books Branch Books
(Branch Current- (Home Office Current –
Dr. balance) Cr. balance)
Unadjusted balance P150,000 P117,420
Add (deduct) adjustments:
In transit 37,500
HO A/R collected by br. 10,500
Supplies returned ( 4,500)
Error in recording Br. NI ( 1,080)
Cash sent to branch
to General Expense by HO 25,000 25,000
Adjusted balance P 179,920 P 179,920
20. a
Home Office Books Branch Books
(Branch Current- Dr. (Home Office Current –
balance) Cr. balance)
Unadjusted balance P40,000 P31,100
Add (deduct) adjustments:
In transit 5,800
HO A/R collected by br. 500
Cash in transit 2,000 2,000
Error in recording Br. NI ( 3,600) _______
Adjusted balance P38,900 P38,900
22. a
Home Office Books Branch Books
(Branch Current- Dr. (Home Office Current –
balance) Cr. balance)
Unadjusted balance P49,600 P44,00
Add (deduct) adjustments:
Collection of branch A/R ( 800)
In transit 3,200
Purchase of furniture ( 1,200)
Return of excess merchandise ( 1,500)
Remittance ( 500) _______
Adjusted balance P46,400 P46,400
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.
Theories
1. decentralized 11. False 21. False 31. E 41. A
2. Home Office Current 12. False 22. True 32. B 42. C
3. Branch Income 13. False 23. True 33. c 43. B
4. Home Office 14. True 24. True 34. d 44. D
5. intracompany 15. True 25. False 35. A 45. D
6. True 16. False 26. C 36. C 46. C
7. True 17. True 27. A 37. A 47. B
8. False 18. False 28. A 38. B 48. B
9. False 19. True 29. D 39. B 49. C
10, True 20. True 30. A 40. B 50. C
51. C
52. D