University of Nueva Caceres

College of Business and Accountancy

Quiz
Accounting For Special Transactions JDMANAOG

1. Which of the following statements is/are true regarding sales agency and branch?
I. A sales agency is not a self-contained business but rather acts only on
behalf of the home office.
II. A branch is a self-contained business which acts independently, but within the bounds
of the company policy and subject to the control of the home office
a. I Only
b. II only
c. I and Ii
d. Neither I nor II
2. The freight on shipments to branch paid by the home office is recorded by the home office as
a. Debit to freight-in
b. Credit to freight-in
c. Credit to Investment in Branch
d. Credit to Cash
3. For external reporting, the individual financial statements of the home office and the branch are combined
a. By using complex consolidation procedures
b. By recognizing the home office’s own assets, liabilities, income and expenses plus its share in the
branch’s assets, liabilities, income and expenses
c. By adding together similar items of assets, liabilities, income and expenses
d. By adding together similar items of assets, liabilities, income and expenses and eliminating reciprocal
accounts
4. Which of the following accounts would be shown in the combined financial statements of the home office and
branch?
a. Investment in Branch account
b. Allowance for unrealized gross margin in branch inventory
c. Home office account
d. None of the above

The following were found in your examination of the interplant accounts between the Bulacan Home Office and its Laguna
Branch.
a. Transfer of fixed assets from Home Office amounting to P67,450 was not booked by the branch.
b. P12,500 covering marketing expense of another branch was charged by Home Office to Laguna
c. Laguna recorded a debit note on inventory transfers from Home Office of P93,750 twice.
d. Home office recorded cash transfer of P82,125 from Laguna Branch as coming from Tagum City Branch
e. Laguna reversed a previous debit memo from Cagayan de Oro Branch amounting to P13,125. Home Office
decided that this change is appropriately Tagum City Branch’s cost.
f. Laguna recorded a debit memo from Home Office of P5,812.50 as P5,700
5. The net adjustment in the Home Office books related to the Laguna Branch Current account is
a. P94,625 b. P81,125 c. P107,750 d. P118,525

The San Miguel Branch of Lawliet, Inc. buys merchandise from outsiders and receive merchandise from the home office
for which it is billed at 20% above cost. Below are excerpts from the trial balances and data on the home office and San
Miguel Branch for the month of April, 2018:

HOME OFFICE:
Cr. Allowance for overvaluation of branch merchandise 462,500
Cr. Shipment to Branch 1,062,500
BRANCH:
Dr. Beginning Inventory 1,800,000
Shipments from Home office 1,275,000
Purchases 512,500
Month-end additional data:
Ending inventory of branch 1,825,000
From Home Office, billed price of 1,462,500
From outsiders, at cost 362,500
6. The total cost of goods sold of the San Miguel Branch at cost (net of overvaluation) for the month just ended
amounted to:
a. 1,762,500 b. P1,731,250 c. P1,543,750 d.P2,312,500
 University of Nueva Caceres
College of Business and Accountancy
Quiz
Accounting For Special Transactions JDMANAOG

The following information are taken from the books and records of Geass Company and its branch. The balances are at
December 31, 2018, the second year of the company’s operations.
Home Office Books Branch Books
Sales P500,000
Expenses 125,000
Shipment to Branch P250,000
Branch Inventory Allowance 71,875

The branch obtains all its merchandise from the home office. The home office ships the merchandise at 125% of its cost.
The ending inventory of the branch is P50,000 at the billed price.
7. The true income of the branch is:
a. P68,812.25 b. P140,000 c. P127,500 d. P52,500

Presented below are items taken from the unadjusted trial balances of Survey Corp. and its Manila Branch on December
31, 2018:
Home Office Books Branch Books
Shipment to branch P2,250,000
Allowance for OV of Branch Inv. 749,250
Shipment from HO P2,925,000
Purchases (from other vendors) 1,084,500
Merchandise Inventory, 1/1 921,375
Merchandise Inventory, 12/31 365,625
Sales 4,800,000
Expenses 382,500

Assuming that the branch ending inventory acquired from other vendors (OV) is P73,125

8. What is the net income (loss) of the branch insofar as the home office is concerned?
a. P534,000 b. P681,750 c. P315,000 d. (147,750)

Eren Corporation maintains a branch in Iloilo City. Selected balances taken from the books of Eren Corporation and its
Bacolod City branch as of December 31, 2018 are as follows:
Home Office Branch Office

Merchandise Inventory, 1/1 P 12,000 P 8,000

Purchases 150,000 30,000
Shipments from Home Office 93,750
Shipments to Branch 75,000
Branch Inventory Allowance 19,750
Sales 115,000 176,500
Merchandise Inventory, 12/31 14,000 10,350

P4,350 of the branch’s ending inventory came from purchases from suppliers other than the home office.
9. As far as the home office is concerned, the cost of sales of the branch was:
a. P97,120 b. P102,850 c. P121,400 d. P131,850

During the year 2018, the Hisoka Corporation bills its Iloilo branch at 140% of cost. Goods billed at P346,500 were
shipped to the branch. The account Allowance for overvaluation has a balance of P122,400 before adjustment. The
beginning inventory of the branch from the home office at cost is P93,600; the beginning inventory of the branch from
outsiders is P15,200, purchases from outsiders is P130,500.
10. Cost of goods available for sale of the Iloilo branch in 2018 is
a. P486,800 b. P623,240 c. P609,200 d. P463,500

The Ryuk Company bills its UC branch for merchandise at 135% of cost. On December 31 the following information were
reported by the branch:
Merchandise from Home Office (at billed price) Merchandise purchased from outsiders (at cost)
MI, 12/1 P16,200 P4,000
Merchandise into stock,
December 1-31 20,250 12,000
MI, 12/31 18,900 5,000
11. Assuming that the branch has a net income of P20,000 and had returned to the home office merchandise
originally acquired at a billed price of P540. The true branch profit as far as the Ryuk Company is concerned is:
a. P24,690 b. P24,130 c. P20,000 d. P24,410
 University of Nueva Caceres
College of Business and Accountancy
Quiz
Accounting For Special Transactions JDMANAOG

A reconciliation of the Investment in Branch account in the head office of Deku Company and the Home Office account
carried on the books of its CDO branch showed the following discrepancies at December 31, 2018.
a.) Collection of branch account receivable by the home office, P800. The branch was not notified
b.) Shipment in transit to branch on December 31, 2018, P3,200
c.) Acquisition of furniture by the branch, P1,200. The furniture account is to be maintained on the home office
books. The home office had not been notified of the acquisition.
d.) Return of excess merchandise by the branch but not received yet by the home office, P1,500.
e.) Cash remittance by the branch on December 31, 2018, P500. This was still in transit.

The Home office account on the branch books has a credit balance of P44,000 at December 31, 2018.

12. COMPUTE: (1) the unadjusted balance of the Investment in Branch account of the home office books at
December 31, 2018; (2) the adjusted balance of the reciprocal accounts on December 31, 2018
a.) (1)P49,600; (2) P47,200 c.) (1)P47,400; (2) 40,000
b.) (1)P49,600; (2) P46,400 d.) (1)P50,100; (2) 46,000

Kaneki Company its Bulacan Branch for merchandise shipments at 125% of cost. As of cut-off date, December 31, 2016,
the following data were available:
Mdse. Fr Home Office (at Billed Prices) Mdse. Purchased from Outsiders Total
MI, December 1 P300,000 P120,000 P420,000
Additions to stock
During December 450,000 360,000 810,000
Mi, December 31 420,000 150,000 570,000

The branch returned P15,000 worth of merchandise to the Home Office at billed price.
13. The amount of the allowance for overvaluation account that was realized as income in view of branch sales for the
month of December was:
a. P63,000 b. P66,000 c. P87,500 d. P84,000

The Slardar Corporation operates a branch in Lipa City. The Home Office ships merchandise to the branch at 125% of its
cost. Selected information from the December 31, 2018 trial balance are as follows:
Home Office Books Branch Office Books
Sales P600,000 P300,000
Shipments to Branch 200,000
Purchases 350,000
Shipments from Home Office 250,000
Inventory, January 1 100,000 40,000
Allowance for Overvaluation
of Branch Inventory 58,000
Expenses 120,000 50,000

Inventory at December 31, 2018:

Home Office P30,000
Branch Office 60,000

14. The combined net income of the home office and the branch after adjustment is:
a. P326,000 b. P496,000 c. P500,000 d. P280,000
 University of Nueva Caceres
College of Business and Accountancy
Quiz
Accounting For Special Transactions JDMANAOG

Profit and loss data for Mirana Company and its General Santos Branch for 2018 follows:
H.O. Branch
Sales P1,060,000 P315,000
Inventory, 1/1 (at cost) 115,000
Inventory, 1/1:
Acquired from Home Office
( billed price) 50,000
Acquired from Outsiders
(at cost) 35,000
Purchases 820,000 120,000
Shipments to Branch (at cost) 110,000
Shipments from Home Office
(at billed price) 132,000
Inventory, 12/31 (at cost) 142,000
Inventory, 12/31:
Acquired from H.O.
(billed price) 66,000
Acquired from Outsiders
(at cost) 70,000
Operating Expenses 200,000 100,000

Records show that the General Santos Branch was billed for merchandise shipment as follows:
In 2017, cost + 25%;
In 2018, cost + 20%;

15. The combined net income of the home office and the branch for the year ended December 31, 2018 is:
a. P212,000 b. P225,000 c. P247,000 d. P269,000