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Quiz1 Advac
Quiz1 Advac
1. When merchandise shipment to branch account is kept by the home office, the method used is?
2.This is a home office extension which does not sell goods directly to customers but simply gets orders from them.
3. when the branch carries current assets only, and home office buys branch furniture and equipment, this account is debited
by home office.
4.These are goods displayed by an agency to potential customers.
5. A home office extension which keeps separate set of books.
6. This nominal account includes the mark up on branch merchandise before adjusting entries are made.
7.Statements prepared where the reciprocal accounts between home office and branch are already eliminated.
8. When samples sent to the agency are credited to the inventory account
9. When this account shows a debit balance, it is closed by crediting it and debiting branch current account.
10. This merchandise shipment account is always at cost.
Problem Solving:
1. The Del Pilar Manufacturing Corporation has branches in the biggest cities in the Philippines. The fixed assets of these
branches are carried in the home office books. Each branch has an imprest fund of P2000 and is reimbursed periodically for
its expenses. All merchandise are billed to the branches at 25% over cost and are inventoried at the branch at billing price.
The home office uses a periodic inventory method. All branch collections are deposited in a local bank account against
which only the home office can draw. Certain expenses are paid by the home office against the branch.
The opening inventory at this branch was P15,750 and the branch reported sales of P96,345 but of this amount P640 is
uncollectible. The branch inventory at the end of the year is P11,375
Problem2
The following information pertains to shipments of merchandise from Home Office to Branch during 2009:
Home office's cost of merchandise P160,000
Intracompany billlings 200,000
Sales by branch 250,000
Unsold merchandise at branch. 12/31.09 20,000
In the combined income statement of Home Office and branch for the year ended December 31, 2009, what amount
of the above transactions should be included in sales? 3 points
Problem 3
The national Home Company ships and billls merchandise to its provincial branch at cost. The branch carries its own
accounts receivable and makes its own collections. The branch also pays its expenses. The transactions for 2009 are
reflected in the branch trial balance that follows:
Debit Credit
Cash P 11,900
National Home Co. Current P 90,000
Shipments from National Home Co. 120,000
Accounts receivable 62,500
Expenses 8,100
Sale 112,500
Total P202,500 P202,500
Problem 4
The baguio branch of a home office in Manila is billed for merchandise it receives at 125% of cost. The branch turn around
and sells them at 25% of billed price. On March 15, all branch's merchandise was destroyed by fire. The branch's records
recovered shows the following:
Inventory, January 1 ( at billed price) 165,000
Shipments, January 1 to the date of fire ( at billed price) 110,000
Purchases ( at cost) from outsiders all resold at markup of 20% 7,500
Sales 169,000
Sales returns and allowances 3750
Problem 5
Comparison between the interoffice account the Wal Wholesaler Company with its sub-urban branch and the corresponding
account carried on the latter's book shows the following discrepancies at the close of business on September 30, 20x7:
a. A charge of P870 (Office Furniture) on the home office books is taken up by the branch as P780.
b. A credit by the home office for P300 (Merchandise Allowances) is taken up by the branch as P350.
c. The home office charges the branch P325 for interest on open account, which the branch fails to take up in full; instead,
the branch sends to the home office an incorrect adjusting memo, reducing the charge by P75 and sets up a liability for the
net amount.
d. A charge for labor by the home office P433 is taken up twice by the branch.
e. A charge of P785 is made by the home office for freight on merchandise, but the amount is entered by the branch as P78.5
f. The branch incorrectly sends the home office a debit note for P293, representing its proportion of a bill for truck repairs;
the home office does not record it.
g.The home office receives P475 from the sale of a truck, which it erroneously credit to the branch; the branch does not
charge the home office therewith.
h. The branch accidentally receives a copy of the home office entry dated October 10,2007, correcting item (g.) and enters a
credit in favor of the home office as of September 30, 2007.
The balance of the account with the branch on the home office books shows P131,690 receivable from the branch at
September 30, 2007. The interoffice account were in balance at the beginning of the year.
Answer Problem 1:
Del Pilar Manufacturing Corporation
Davao Branch Income Statement
For the Year Ended, December 31, 20x7
a)
Sales 96,345
Less: Cost of Goods Sold
Inventory, January 1 15,750
Shipments from Home Office 64,000
Available for Sale 79,750
Inventory, December 31 11,375 68,375
Gross Profit 27,970
Less: Expenses
Advertising 3,200
Depreciation 1,200
Other Expenses 18,300
Loss on uncollectible accounts 640 23,340
Net Income 4,630
c)
Del Pilar Manufacturing Corporation
Davao Branch Balance Sheet
December 31, 20x7
Home Office
g) Sale of truck erroneously credited to 475
branch
h) Erroneously entered by branch 475- Dr.
1.) Balance on branch books before adjustment (pls. see working papers) P
131,608.50