1.

For ItemS 1 and 2 , use the following information:

SAPPHIRE  Co. operates a branch in Makati City. At close of the business on 12-
31-20, Makati Branch account in the home office books showed a debit balance
of P184,750. The interoffice accounts were in purposes of reconciling the
interoffice accounts, the following facts were ascertained:

a. Furniture and fixture costing the home office P91,000 as picked up by the
branch as P9,100.The branch will maintain the record of the asset used
b. Freight charge on merchandise made by the home office for P1,350 was
recorded in the branch books as P3,150.
c. Home office credit memo for P2,400 Was recorded twice by the branch.
d. The branch failed to take up a P3,000 debit memo from the home office
e. The home office inadvertently recorded a remittance for P31,000 from its
Mandaluyong branch as a remittance from its Makati branch.
f. On 12-31-20, the branch sent a check for P27,000 to the home office to settle
its account. The check was not delivered to the home office until January 3, 2021.
g. On 12-31-20 the branch returned P11,000 of seasonal merchandise to the
home office for January clearance sale. The merchandise was not received by the
home office until January 4.
h. The home office allocated general expenses of P5,000 to the branch. The
branch had not entered the allocation of the year-end.
i. Branch store insurance premiums of P3,200 were paid by the home office, the
branch recorded the amount of P32,000.

How much is the balance in the branch books of the Home Office account before
adjustment as of 12-31-20?
(4 Points)

2.HOw much is the adjusted balance of the reciprocal accounts?

(4 Points)

3.For Items 3 and 4 , use the following information:

DIAMOND Inc opened an agency in TARLAC in 2021 the following are the
transaction of the agency:
Sales orders sent to home office…………………………………………………………......P198,000
Sales order filled by Home Office in 2020……………………………………………. .....267,400
Freight on shipment to agency………………………………………………………………..... 13,960
Collection, net of 3% discount……………………………………………………………….. ...141,426
Selling expenses from agency working fund…………………………………………...... 10,152
Administrative expenses charged to agency………………........................................... 6% of
gross sale

Sample shipped to agency at cost : P10,800; Inventory end of samples; P3,960

The company maintain its gross profit on agency gross sale at 30% excluding the
freight cost on shipment to agency.

What is the agency’s cost of sales including freight?

(4 Points)

4.How much is the agency's net income in 2021?

(4 Points)

5.JADE  Company is currently preparing its combined financial statements. At

December 31, 2020, the home office shows a P228,000 balance in its investment
in branch account. The following has been gathered: A credit memo sent by
home office to the branch amounting to 19,000. The home office allocated
unpaid utilities expense amounting to 20,000 to the branch which the branch did
not record in full. Instead, the branch sent a wrong adjusting memo to the home
office reducing the charge by 2,500 and setting up a liability for the remaining
amount. A debit memo sent by the branch to the home office amounting to
3,000 was recorded by the home office as 30,000. The home office sent by
mistake a credit memo amounting to 27,000 to the branch. The branch did not
record it. A credit memo sent by the home office to the branch amounting
12,000. The home office erroneously credited the branch for a return of shipment
of merchandise worth 25,000. The branch did not make any return of
merchandise. The branch mistakenly received a copy of of the home office
correcting entry dated January 3, 2021 and entered a credit in favor of the home
office on December 31, 2020. A credit memo sent by the branch to the home
office amounting 10,000 was recorded by the home office by crediting the
reciprocal account twice. The branch mistakenly sent the home office a debit
memo amounting 3,000 for the apparent remittance of collections which did not
happen. The home office did not record the debit memo.

Compute the unadjusted balance of home office equity account.

(5 Points)

6.Items 6-7 Pearl  Company has established a branch in laguna and sending
goods costing P184,900 and P80,000 in cash on July 1, 2020. Home office
initiated transactions for the remainder of the year is found below. At the end of
the year, the company’s controller has found out that the accounting staff
assigned in recording the transactions between the home office and the branches
had failed to record all the transactions initiated by the branch. Because of this,
there is a significant discrepancy between the balances of the reciprocal accounts.

a. The home office acquired computer equipment amounting to P240,000 for the
branch on August 1, 2020. As per agreement, the branch will keep all the
property, plant and equipment records.
b. Goods costing P320,000 were shipped from the home office to branch on
November 9,2020
c. Additional cash amounting to P53,000was transferred to the branch on 12-2-20
d. A branch customer has incorrectly paid P25,000 cash to the home office on 12-
16-20
e. The home office incurred P56,000 of advertising cost and P69,000 of salaries.
laguna  branch is to shoulder 30% and 20% of these expenses respectively

For the purpose of reconciling the reciprocal accounts, the controller has
instructed the branch accountant to send a copy of the Home office current
general ledger to the home office:

HOME OFFICE CURRENT

Debit:

8/3 - Equipt. acquisition ............... 240,000

11/5 - Cash remittance ....................78,000
12/20 - Returns of good to HO.....49,000

Credit:
7/1 - Goods from HO .................... P184,900
7/1 - Cash ................................................ 80,000
8/15- Collection of HO’s AR .......... 113,600
11/10 - Goods from HO .................. 230,000
12/4 - Cash ............................................ 50,300

How much is the net adjustment in Home Office Current account?

(4 Points)

7.How much is the adjusted investment in Branch Account

(4 Points)

8.EMERALD COMPANY opened a sales agency in Boracay Island Pertinent

information regarding the sales agency transactions were as follows:
> sales P653,000; collections, net of 4 % discount P483,840
>Expenses paid from the agency working fund P63,500 and expenses allocated
by the home office P29,850
> Agency samples beg. P34,000; inventory  end P3,600
> Emerald company's gross profit rate on net sales is 30%
> Tne receivable balance is estimated to be 97% collectible

What is the net income of Boracay Island Agency?

(5 Points)

9.ONYX Company had its operation in two locations, a main office and a branch
plant.  the following data were given concerning the transactions of the home
office and the branch

Home office inventory beg., was P126,000; Purchases P1,400,000; shipment to

branch P300,000 and inventory end, P120,000

Branch inventory beg., P24,000; Purchases P48,000; shipment from home office
P360,000 and inventory end, 26,000

1/4 of the beginning inventory of branch was acquired from outside suppliers.
the branch ending inventory includes P5,000 from outside suppliers.
what is the cost of good sold to be included in the published income statement
for the current year?
(5 Points)

10.TOPAZ CO., furnished the following data regarding home office and its
branch  operation for the year 2021:
Home office inventory beg., P23,000; Investment in branch P58,300; Purchases
P190,000; expenses P52,000
Home office sales P155,000; shipment to branch P110,000; allowance for
overvaluation of branch inventory at Jan., 1, 2021 P1,000

Branch inventory beg., P11,550; shipment from home office  P105,000 ; freight in
from home office 5,500 expenses P28,000
Home office equity account P53,300 ; Branch sales P140,000

Home office bills the goods at cost plus 10% mark-up. At December 31, 2021, a
shipment with a billed value of P5,000 was still in transit. Freight in on this
shipment was P250 . Inventories on Dec., 31 2021 excluding the shipment in
transit were: Home office , at cost P30,000 and Branch, at billed price (excluding
freight of P520) P10,400

 How much is the net income of the branch as far as the home office is concern?
(4 Points)

11.How much is the net income to be presented in the combined Financial

Statements of TOPAZ Co.,?
(4 Points)

12.Due to recent super typhoon happened in Davao city on month of Sept, 2021 ,
the warehouse of GOLD company was totally submerged by water, on this note
the following data were given

Merchandise Beg., P110,000 Purchases for the current year 2021 before the
calamity, were P560,500; Freight in P5,600; Purchases returns P10,200 ; Sales
P695,000; sales return ans allowances P7,500
if the gross profit rate is 20%, how much is the cost of mechandise destroyd by
the typhoon?

(3 Points)