The HE Corporation has a branch in Davao City, The respective trial balances on

December 31, 20XX are given as follows:

HE Corporation
Adjusted Trial Balances
December 31, 20XX

Home Office Branch

(Dr) (Cr) (Dr) (Cr)
Cash 36,000 7,000
Accounts Receivable 54,000 29,000
Inventory, January 1, 20XX 45,000 18,000
Investment in Branch 70,000
Equipment (net) 95,000
Purchases 540,000
Shipments from Home Office 145,000
Expenses 90,000 20,000
Accounts Payable 27,000 4,000
Home Office 70,000
Share Capital 54,000
Retained Earnings, January 1, 20XX 144,000
Sales 560,000 145,000
Shipments to Branch 145,000
930,000 930,000 219,000 219,000

Inventory December 31, 20XX 90,000 60,000

Required:
1. Prepare closing entries for the branch.
2. Prepare closing entries for the home office including the entry to record the branch net
income.
3. Prepare a combined working paper.

(1) and (2) Closing Entries

Branch Books Home Office Books

? ? ? ?
? ? ? ?
? ? ? ?
? ? ? ?
? ? ? ?
? ? ? ?
? ?

? 22,000 ? 22,000
? 22,000 Branch income
22,000