CPA REVIEW SCHOOL OF THE PHILIPPINES

MANILA

PRACTICAL ACCOUNTING PROBLEMS II HOME OFFICE AND BRANCH ACCOUNTING

GUERRERO / GERMAN
SIY / DE JESUS / LIM / FERRER

PROBLEM 1

How much net income would be reported by the BGC agency on December 31, 2013?

A. P4,471,250
B. P4,135,250
C. P5,535,250
D. P3,855,250

P1

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Sales 27,562,500

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Sales Discounts (616,000)
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Net sales 26,946,500
COS
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GP 7,652,750
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OPEX (1,837,500)
Depreciation (4.2M x 80% x 7/12) (1,960,000)
Net Income 3,855,250 D
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PROBLEM 2
By what amount will the Allowance for Unrealized Gross Margin in Branch Inventory account be debited at
the end of the year?
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A. P12,250,000
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B. P10,825,000
C. P1,185,000
D. P2,610,000
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P2
100% 125% 225%
Cost MU BP
Beg 800,000 1,000,000 1,800,000
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Ship 9,000,000 11,250,000 20,250,000

Total 9,800,000 12,250,000 22,050,000
End. 1,140,000 1,425,000 2,565,000
COGS/RA 8,660,000 10,825,000 19,485,000
B

PROBLEM 3

How much is the total goods available for sale of the branch from the home office?

A. P5,308,335
B. P6,337,500
C. P8,090,000
D. P6,100,000

https://www.coursehero.com/file/24402454/177315896-HOB-Solutionspdf/
 P3

Cost MU BP
Beg 2,375,000 475,000 2,850,000
Ship 2,500,000 750,000 3,250,000
Total 4,875,000 1,225,000 6,100,000
D

PROBLEM 4

Compute for the following:

Unadjusted balance of Investment in Tacloban account?

A. P1,142,800
B. P1,044,800
C. P1,071,600
D. P1,058,200

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Net adjustment in the Home Office Current account. Indicate whether net debit or net credit.

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A. P946,400 net debit
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B. P946,400 net credit
C. P996,400 net debit o.
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D. P996,400 net credit

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P4
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BC HOC
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Beg. Balance 264,900

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Branch equipment 420,000

Shipments 320,000
Cash transfer 53,000
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Collection of Br. AR (25,000)

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Alloc. Of Exp 38,700

Unadjusted balance 1,071,600 111,800
Correction of dr. For Equipment 420,000
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Recording of equipment from HO 420,000

Understatement of shipments 90,000
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Understatement of cash transfer 2,700

Collection of Br. AR (25,000)
Allocation of expenses 38,700
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Collection of HO AR 113,600
Cash remittance from Br. (78,000)
Return of shipments (49,000)
Adjusted balances 1,058,200 1,058,200

Net Adjusment 946,400

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 PROBLEM 5

What is the unadjusted balance of the home office-current account in the books of Cebu branch on
December 31, 2013?

A. P2,855,940
B. P2,768,940
C. P2,781,900
D. P2,754,420
P5
BC HOC
Unadjusted balance 3,132,660 2,768,940 B
Mark up on shipments 87,000
Correction and allocation of RE 216,000
Write off of AR (60,720)
Collection of HO AR 317,520 317,520
Adjusted balances 3,389,460 3,389,460

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PROBLEM 6

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Compute for the following:

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Adjusted balance of Investment in Baguio account

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A. P72,550
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B. P66,800
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C. P86,850
D. P103,950

Adjusted balance of Investment in Davao account

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A. P181,450
B. P182,550
C. P175,700
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D. P145,400
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Unadjusted balance of Home Office Current account in Baguio’s books

A. P52,150
B. P87,200
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C. P107,250
D. P92,950

Unadjusted balance of Home Office Current account in Davao’s books

A. P236,250
B. P122,000
C. P115,150
D. P84,850

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 P6
Baguio Davao BHO DHO
Unadjusted balance 186,500 84,000 92,950 115,150
Inter cash (74,000) 74,000 27,000
Inter shipments (31,400) 30,300 (31,400) 30,300
Inter collections 5,750 (5,750) (5,750)
Allocation 11,000 9,000
Cash remittance (14,300)
Return of Shipments (6,850)
Adjusted balances 72,550 175,700 72,550 175,700

Baguio Davao
Cost of shipments 28,900 28,900
Freight in 2,500 5,000
Freight paid 3,600
Net Amount 31,400 30,300

PROBLEM 7

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How much is the adjusted balance of the Branch Current account on December 31, 2013 before the necessary
closing entries were made?

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A. P701,718
B. P659,238
C. P623,238 o.
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D. P665,718
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What is the amount of adjustment in the Allowance for Overvaluation of Branch Inventory account?
A. P56,700
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B. P49,080
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C. P14,700
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D. P42,000
How much is the net income of Ortigas branch that will be reported in the combined income statement of The
Makati Company?
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A. P236,250
B. P208,950
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C. P194,250
D. P239,130
What is the amount of the Home Office Current account that will be reported in the books of Ortigas
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branch after closing entries are made?

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A. P856,668
B. P895,488
C. P856,368
D. P853,488
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P7

BC
Unadjusted balance 656,238
Equipment purchased for branch 36,000
Cash remitance (33,000)
Adjusted balances before closing 659,238 B

Beg. Allow. 21,300

Allow on shipment 35,400
Total allow. 56,700
Less: Required allow. 14,700
Adjustment or realized allow. 42,000 D

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 HO BR.
Unadjusted NI 197,730 197,730
Depreciation on Equipment (2,880) (2,880)
Allocated expense (600) (600)
Realized allow. 42,000
True Net income/ Unadjusted NI 236,250 194,250

Adjusted balance of HO before NI 659,238

NI branch point of view 194,250
Home office current after closing 853,488 B

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