2

(a) O
(b) 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
2. (a) Entries to bring branch books up to date:
Correction in Income of Prior Periods 215
Home Office 215
Home Office 215

Income Summary 215
Home Office 65
Accounts Receivable 65
(b) Entries to bring home office books up to date:
Beverly Hills Branch 1,225
Beverly Hills Branch Income 1,225
Beverly Hills Branch 310
Retained Earnings 310
Shipments to Beverly Hills Branch 1,400
Brentwood Branch 1,400
Shipments to Brentwood Branch 1,400
(c) Understatement of branch paid by home office for

December
310

P 60,900 P 57,740
Deductions:

1,400
Home Office 215
Home Office 215
Income Summary 215
Home Office 65
(d) Understatement of branch paid by home office for

December
310
P 60,900 P 57,740
Deductions:

1,400
Home Office 215
Home Office 215
Income Summary 215
Home Office 65

(e) Understatement of branch paid by home office for

December
310
P 60,900 P 57,740
Deductions:

1,400

Home Office 215
Home Office 215
Income Summary 215
Home Office 65

(f) Understatement of branch paid by home office for

December
310
P 60,900 P 57,740
Deductions:

1,400
Home Office 215

Home Office 215
Income Summary 215
Home Office 65
(g) Understatement of branch paid by home office for

December
310

P 60,900 P 57,740
Deductions:

1,400
Home Office 215
Home Office 215
Income Summary 215
Home Office 65
(h) ffice Books:
(a) Branch ………………………………………………………. 42,500

Cash ……………………………………………………. 42,500
(b) Branch ……………………………………………………… 50,200

Shipments to Branch ……………………………….. 50,200
(c) Accounts Receivable …………………………………... 105,000

Sales …………………………………………………… 105,000
(d) Purchases …………………………………………………. 122,500

Accounts Payable …………………………………. 122,500
(e) Cash ……………………………………………………….. 113,600
Accounts Receivable ……………………………… 113,600
(f) Accounts Payable ………………………………………. 124,000

Cash …………………………………………………… 124,000
(g) Expenses …………………………………………………… 26,600

Cash …………………………………………………… 26,600
(h) Cash ……………………………………………………….. 53,400

Branch ………………………………………………... 53,400
(i) Retained Earnings ………………………………………. 10,000

Cash …………………………………………………... 10,000
BARTON CO.
Balance Sheet for Branch
December 31, 20x4
Assets Liabilities
Cash …………………………… P 4,250 Accounts Payable ………… P 10,250
Accounts Receivable ……… 12,600 Accrued Expenses …………… 300
Merchandise Inv……………... 23,500 Home Office ………………….. 37,900
Prepaid Expenses …………… 750
Furnitures & Fixtures …. P 8,000
Less accum. Depr …… 650 7,350
Total Assets …………………… P48,450 Total Liabilities ………………….P48,450

BARTON CO.
Income Statement for Branch
For Year Ended December 31, 19X6
Sales …………………………………………………………………………… P66,000
Cost of Goods Sold:
Purchases …………………………………………………………… P22,500
Shipments for home office ………………………………………. 50,200
Merchandise available for sale ………………………………… P72,700
Less Branch Books:
Expenses ………………………………………………………………. 650

Accumulated Depreciation – F&F………………………. 650
Sales …………………………………………………………………… 66,000
Merchandise Inventory ……………………………………………. 23,500
Income summary ………………………………………….. 89,500
Income Summary …………………………………………………… 90,900

Shipments from Home Office …………………………… 50,200
Purchases …………………………………………………… 22,500
Expenses …………………………………………………….. 18,200
Home Office ………………………………………………………… 1,400

Income Summary ………………………………………… 1,400
(a) Home Office Books

Expenses ………………………………………………………………. 1,180
Accumulated Depreciation – F&F………………………. 1,180
Sales …………………………………………………………………… 105,000
Shipments to Branch ……………………………………………….. 50,200
Income summary ………………………………………….. 203,700
Income Summary …………………………………………………… 190,250
Merchandise Inventory …………………………………… 40,120
Purchases ……………………………………………………. 122,500
Expenses …………………………………………………….. 27,630
Branch Income ……………………………………………………… 1,400
Branch ………………………………………………………. Cash ……………………………………………………..

18,000
(i) Home Office Books:

(j) Office Books:
(j) Branch ………………………………………………………. 42,500

Cash ……………………………………………………. 42,500
(k) Branch ……………………………………………………… 50,200

(l) Accounts Receivable …………………………………... 105,000

Sales …………………………………………………… 105,000
(k) Home Office Books:
Cash …………………………………………………….. 18,000
(l) Home Office Books:

(m) Branch ………………………………………………………. 42,500
Cash ……………………………………………………. 42,500
(n) Branch ……………………………………………………… 50,200

(o) Accounts Receivable …………………………………... 105,000

Sales …………………………………………………… 105,000
(p) Purchases …………………………………………………. 122,500

(q) Cash ……………………………………………………….. 113,600

(r) Accounts Payable ………………………………………. 124,000

Cash …………………………………………………… 124,000
(s) Expenses …………………………………………………… 26,600

Cash …………………………………………………… 26,600
(t) Cash ……………………………………………………….. 53,400

Branch ………………………………………………... 53,400
(u) Retained Earnings ………………………………………. 10,000

Cash …………………………………………………... 10,000
BARTON CO.
December 31, 20x4
Assets Liabilities

BARTON CO.
Sales …………………………………………………………………………… P66,000
Cost of Goods Sold:
Purchases …………………………………………………………… P22,500
Less merchandise inv, December 31 ………………………….. 23,500
Cost of Goods Sold ……………………………………………….. 49,200
Gross Profit ……………………………………………………………………. P16,800
Expenses ……………………………………………………………………… 18,200

Net loss ………………………………………………………………………... P 1,400
BARTON CO.
For Year Ended December 31, 20x4
Assets Liabilities & Stockholders’ Equity
Cash …………………………….. P 23,200 Liabilities

Accounts Receivable ……….. 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 ……………………………………………………………………………....... P105,000
Cost of goods sold:
Merchandise inventory, January 1 …………………………………. P 40,120
Purchases ………………………………………………………………... 122,500

Merchandise available for sale ……………………………………… P162,620
Less shipments to branch ……………………………………………... 50,200
Merchandise available for own sale ……………………………….. P112,420
Less merchandise inventory, December 31 ………………………. 48,500
Cost of Goods Sold ……………………………………………………. 63,920
Gross Profit ………………………………………………………………………… P 41,080
Expenses …………………………………………………………………………… 27,630
Net income from own operations …………………………………………….. P 13,450
Deduct branch net loss …………………………………………………………. 1,400
Total Income ………………………………………………………………………. P 12,050
BARTON CO.
Sales …………………………………………………………………………………. P171,000
Cost of goods sold:
Merchandise inventory, January 1 ………………………………….. P 40,120
Purchases ………………………………………………………………… 145,000

Less merchandise inventory, December 31 ……………………….. 72,000
Cost of goods sold ………………………………………………………. 113,120
Gross profit ………………………………………………………………………….. P 57,880
Expenses …………………………………………………………………………….. 45,830
Net Income …………………………………………………………………………. P 12,050
(b) Branch Books:

Expenses ………………………………………………………………. 650
Sales …………………………………………………………………… 66,000
Income summary ………………………………………….. 89,500
Income Summary …………………………………………………… 90,900

Purchases …………………………………………………… 22,500
Expenses …………………………………………………….. 18,200
Home Office ………………………………………………………… 1,400

Income Summary ………………………………………… 1,400
(c) Home Office Books

Expenses ………………………………………………………………. 1,180
Sales …………………………………………………………………… 105,000
Income summary ………………………………………….. 203,700

Income Summary …………………………………………………… 190,250
Purchases ……………………………………………………. 122,500
Expenses …………………………………………………….. 27,630
Branch Income ……………………………………………………… 1,400
Branch ………………………………………………………. Cash ……………………………………………………..

18,000
(m) Home Office Books:
(v) Branch ………………………………………………………. 42,500

Cash ……………………………………………………. 42,500
(w) Branch ……………………………………………………… 50,200

(x) Accounts Receivable …………………………………... 105,000

Sales …………………………………………………… 105,000
(y) Purchases …………………………………………………. 122,500

(z) Cash ……………………………………………………….. 113,600

(aa) Accounts Payable ………………………………………. 124,000

Cash …………………………………………………… 124,000
(bb) Expenses …………………………………………………… 26,600

Cash …………………………………………………… 26,600
(cc) Cash ……………………………………………………….. 53,400
Branch ………………………………………………... 53,400
(dd) Retained Earnings ………………………………………. 10,000

Cash …………………………………………………... 10,000
BARTON CO.
December 31, 20x4
Assets Liabilities
BARTON CO.

Sales …………………………………………………………………………… P66,000
Cost of Goods Sold:
Purchases …………………………………………………………… P22,500
Gross Profit ……………………………………………………………………. P16,800
Expenses ……………………………………………………………………… 18,200
Net loss ………………………………………………………………………... P 1,400
BARTON CO.

BARTON CO.
Sales ……………………………………………………………………………....... P105,000
Cost of goods sold:
Purchases ………………………………………………………………... 122,500
Gross Profit ………………………………………………………………………… P 41,080
Expenses …………………………………………………………………………… 27,630
Total Income ………………………………………………………………………. P 12,050

Income Summary …………………………………………………… 190,250
Purchases ……………………………………………………. 122,500
Expenses …………………………………………………….. 27,630
Branch Income ……………………………………………………… 1,400
Branch ………………………………………………………. Cash ……………………………………………………..

18,000
(n) Home Office Books:
(ee) Branch ………………………………………………………. 42,500

Cash ……………………………………………………. 42,500
(ff) Branch ……………………………………………………… 50,200

(gg) Accounts Receivable …………………………………... 105,000

Sales …………………………………………………… 105,000
(hh) Purchases …………………………………………………. 122,500

(ii) Cash ……………………………………………………….. 113,600

(jj) Accounts Payable ………………………………………. 124,000

Cash …………………………………………………… 124,000
(kk) Expenses …………………………………………………… 26,600

Cash …………………………………………………… 26,600
(ll) Cash ……………………………………………………….. 53,400

Branch ………………………………………………... 53,400
(mm) Retained Earnings ………………………………………. 10,000
Cash …………………………………………………... 10,000
BARTON CO.
December 31, 20x4
Assets Liabilities
BARTON CO.
Sales …………………………………………………………………………… P66,000

Cost of Goods Sold:
Purchases …………………………………………………………… P22,500
Gross Profit ……………………………………………………………………. P16,800
Expenses ……………………………………………………………………… 18,200
Net loss ………………………………………………………………………... P 1,400
BARTON CO.

BARTON CO.
Sales ……………………………………………………………………………....... P105,000
Cost of goods sold:
Purchases ………………………………………………………………... 122,500
Gross Profit ………………………………………………………………………… P 41,080
Expenses …………………………………………………………………………… 27,630
Total Income ………………………………………………………………………. P 12,050
BARTON CO.
Sales …………………………………………………………………………………. P171,000
Cost of goods sold:
Merchandise inventory, January 1 ………………………………….. P 40,120
Purchases ………………………………………………………………… 145,000
Less merchandise inventory, December 31 ……………………….. 72,000
Cost of goods sold ………………………………………………………. 113,120
Gross profit ………………………………………………………………………….. P 57,880
Expenses …………………………………………………………………………….. 45,830
Net Income …………………………………………………………………………. P 12,050
(d) Branch Books:

Expenses ………………………………………………………………. 650
Sales …………………………………………………………………… 66,000
Income summary ………………………………………….. 89,500
Income Summary …………………………………………………… 90,900

Purchases …………………………………………………… 22,500
Expenses …………………………………………………….. 18,200
Home Office ………………………………………………………… 1,400
Income Summary ………………………………………… 1,400
(e) Home Office Books

Expenses ………………………………………………………………. 1,180
Sales …………………………………………………………………… 105,000
Income summary ………………………………………….. 203,700
Income Summary …………………………………………………… 190,250
Purchases ……………………………………………………. 122,500
Expenses …………………………………………………….. 27,630
Branch Income ……………………………………………………… 1,400
Branch ………………………………………………………. Problem V continued
Credits
Accumulated Depreciation – Furniture
And Fixtures ……………………… 2,585 576 ……….. ……….. ……….. ……….. ……….. 3,161
Unrealized Intercompany Inventory ……….. ……….. (b) 1,700 ……….. ……….. ……….. ……….. ………..
Profit ………………………………. 3,700 ……….. (c) 2,000 ……….. ……….. ……….. ……….. ………..
……….. ……….. ……….. ………..
Salaries and Commissions Expense . 4,250 2,350 ……….. 6,600 ……….. ……….. ……….. ………..
Store Supplies Expense ………………. 560 280 ……….. 840 ……….. ……….. ……….. ………..
Miscellaneous Selling Expense …….. 1,850 1,050 ……….. 2,900 ……….. ……….. ……….. ………..
Rent Expense ………………………….. 2,700 1,500 ……….. 4,200 ……….. ……….. ……….. ………..
Depreciation Expense – F&F ……….. 85 36 ……….. 121 ……….. ……….. ……….. ………..
Miscellaneous General Expense ….. 2,510 95 ……….. 3,415 ……….. ……….. ……….. ………..
160,295 57,141 ……….. ……….. ……….. ……….. ……….. ………..
Merchandise Inv, Dec 31 …………… 24,900 14,600 ……….. (d) 1,950 ……….. ……….. 36,850 ………..
Problem V
SPENCER CO.
Work Sheet for Combined Statements for Home Office and Branch
December 31, 20x5
Adjustments Income Balance

Home and Eliminations Statement Sheet
Office Branch Dr. Cr. Dr. Cr. Dr. Cr.
Debits
Cash …………………………………….. 10,350 2,650 ……….. ……….. ……….. ……….. 13,100 ………..
Cash in Transit …………………………. 1,500 …….. ……….. ……….. ……….. ……….. 1,500 ………..
Accounts Receivable ………………. 26,200 12,850 ……….. ……….. ……….. ……….. 39,050 ………..
Merchandise Inv. Dec 1 ……………. 31,500 14,400 (c) 2,000 43,900 ……….. ……….. ……….. ………..
Store Supplies …………………………. 380 300 ……….. ……….. ……….. ……….. 580 ………..
Prepaid Expenses ……………………. 350 120 ……….. ……….. ……….. ……….. 470 ………..
Furniture & Fixtures …………………… 8,500 3,600 ……….. ……….. ……….. ……….. 12,700 ………..
Branch…………………………………… 32,260 ……… (a) ……….. 32,260 ……….. ……….. ……….. ………..
Retained Earnings ……………………. 6,850 ……… ……….. ……….. ……….. ……….. 6,850 ………..
Purchases ………………………………. 27,600 4,100 ……….. ……….. ……….. ……….. ……….. ………..
Shipments from Home Office ………………… 10,200 (b) 10,200 ……….. ……….. ……….. ……….. ………..
Advertising Expense …………………. 2,850 2,800 ……….. 5,650 ……….. ……….. ……….. ………..
Rent Expense ………………………….. 2,700 1,500 ……….. 4,200 ……….. ……….. ……….. ………..
160,295 57,141 ……….. ……….. ……….. ……….. ……….. ………..
Problem V
SPENCER CO.
December 31, 20x5

Debits
Cash …………………………………….. 10,350 2,650 ……….. ……….. ……….. ……….. 13,100 ………..
Cash in Transit …………………………. 1,500 …….. ……….. ……….. ……….. ……….. 1,500 ………..
Store Supplies …………………………. 380 300 ……….. ……….. ……….. ……….. 580 ………..
Branch…………………………………… 32,260 ……… (a) ……….. 32,260 ……….. ……….. ……….. ………..
Purchases ………………………………. 27,600 4,100 ……….. ……….. ……….. ……….. ……….. ………..
Rent Expense ………………………….. 2,700 1,500 ……….. 4,200 ……….. ……….. ……….. ………..
160,295 57,141 ……….. ……….. ……….. ……….. ……….. ………..
Problem V
SPENCER CO.
December 31, 20x5

Debits
Cash …………………………………….. 10,350 2,650 ……….. ……….. ……….. ……….. 13,100 ………..
Cash in Transit …………………………. 1,500 …….. ……….. ……….. ……….. ……….. 1,500 ………..
Store Supplies …………………………. 380 300 ……….. ……….. ……….. ……….. 580 ………..
Branch…………………………………… 32,260 ……… (a) ……….. 32,260 ……….. ……….. ……….. ………..
Purchases ………………………………. 27,600 4,100 ……….. ……….. ……….. ……….. ……….. ………..
Rent Expense ………………………….. 2,700 1,500 ……….. 4,200 ……….. ……….. ……….. ………..
160,295 57,141 ……….. ……….. ……….. ……….. ……….. ………..
Problem V
SPENCER CO.
December 31, 20x5

Debits
Cash …………………………………….. 10,350 2,650 ……….. ……….. ……….. ……….. 13,100 ………..
Cash in Transit …………………………. 1,500 …….. ……….. ……….. ……….. ……….. 1,500 ………..
Store Supplies …………………………. 380 300 ……….. ……….. ……….. ……….. 580 ………..
Branch…………………………………… 32,260 ……… (a) ……….. 32,260 ……….. ……….. ……….. ………..
Purchases ………………………………. 27,600 4,100 ……….. ……….. ……….. ……….. ……….. ………..
Rent Expense ………………………….. 2,700 1,500 ……….. 4,200 ……….. ……….. ……….. ………..
Miscellaneous General
Accounts Payable ……………… 36,400 4,200 ……….. ……….. ……….. ……….. ……….. 39,000
Accrued Expenses ……………... 260 105 ……….. ……….. ……….. ……….. ……….. 365
Home Office …………………….. ……….. 32,250 (a) 32,260 ……….. ……….. ……….. ……….. ………..
Capital Stock …………………… 65,000 ……….. ……….. ……….. ……….. ……….. ……….. 65,000
Sales ……………………………… 44,850 20,000 ……….. ……….. ……….. 64,850 ……….. ………..
Shipments to Branch …………... 8,500 ……… Problem V
SPENCER CO.
December 31, 20x5

Debits
Cash …………………………………….. 10,350 2,650 ……….. ……….. ……….. ……….. 13,100 ………..
Cash in Transit …………………………. 1,500 …….. ……….. ……….. ……….. ……….. 1,500 ………..
Store Supplies …………………………. 380 300 ……….. ……….. ……….. ……….. 580 ………..
Branch…………………………………… 32,260 ……… (a) ……….. 32,260 ……….. ……….. ……….. ………..
Purchases ………………………………. 27,600 4,100 ……….. ……….. ……….. ……….. ……….. ………..
Advertising Expense …………………. 2,850 2,800 ……….. 5,650 Accounts Payable ……………… 36,400 4,200 ………..
……….. ……….. ……….. ……….. 39,000
Accrued Expenses ……………... 260 105 ……….. ……….. ……….. ……….. ……….. 365
Home Office …………………….. ……….. 32,250 (a) 32,260 ……….. ……….. ……….. ……….. ………..
Capital Stock …………………… 65,000 ……….. ……….. ……….. ……….. ……….. ……….. 65,000
Sales
Branch…………………………………… 32,260 ……… (a) ……….. 32,260 ……….. ……….. ……….. ………..
Purchases ………………………………. 27,600 4,100 ……….. ……….. ……….. ……….. ……….. ………..
Advertising Expense …………………. 2,850 2,800 ……….. 5,650

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(a) O

(b) Understatement of branch paid by home office for

Expenses of branch paid by home office _______ ____215

Collection by home office of branch receivable 65

Correction of branch income for January 215

Merchandise transferred to Brentwood branch but incorrectly

Merchandise returns to home office in transit 840

Uncollectible accounts of branch __1,200 _______

Corrected Balances P 57,460 P 57,460

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

Correction in Income of Prior Periods 215

Home Office 215

Home Office 215

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

Beverly Hills Branch 1,225

Beverly Hills Branch Income 1,225

Beverly Hills Branch 310

Retained Earnings 310

Shipments to Beverly Hills Branch 1,400

Beverly Hills Branch 1,400

Brentwood Branch 1,400

Shipments to Brentwood Branch 1,400

(c) Understatement of branch paid by home office for

Expenses of branch paid by home office _______ ____215

Collection by home office of branch receivable 65

Correction of branch income for January 215

Merchandise transferred to Brentwood branch but incorrectly

Merchandise returns to home office in transit 840

Uncollectible accounts of branch __1,200 _______

Corrected Balances P 57,460 P 57,460

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

Correction in Income of Prior Periods 215

Home Office 215

Home Office 215

Income Summary 215

Beverly Hills Branch 1,225

Beverly Hills Branch Income 1,225

Beverly Hills Branch 310

Retained Earnings 310

Shipments to Beverly Hills Branch 1,400

Beverly Hills Branch 1,400

Brentwood Branch 1,400

Shipments to Brentwood Branch 1,400

(d) Understatement of branch paid by home office for

Expenses of branch paid by home office _______ ____215

Collection by home office of branch receivable 65

Correction of branch income for January 215

Merchandise transferred to Brentwood branch but incorrectly

Merchandise returns to home office in transit 840

Uncollectible accounts of branch __1,200 _______

Corrected Balances P 57,460 P 57,460

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

Correction in Income of Prior Periods 215

Home Office 215

Home Office 215

Income Summary 215

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

Beverly Hills Branch 1,225

Beverly Hills Branch Income 1,225

Retained Earnings 310

Shipments to Beverly Hills Branch 1,400

Beverly Hills Branch 1,400

Brentwood Branch 1,400

Expenses of branch paid by home office ___ 215

Uncollectible accounts of branch 1,200 _____

Expenses of branch paid by home office ___ 215

Uncollectible accounts of branch 1,200 _____

Expenses of branch paid by home office ___ 215

Uncollectible accounts of branch 1,200 _____

Expenses of branch paid by home office ___ 215

Uncollectible accounts of branch 1,200 _____

Expenses of branch paid by home office ___ 215

Uncollectible accounts of branch 1,200 _____

Expenses of branch paid by home office ___ 215

Uncollectible accounts of branch 1,200 _____