ASSIGNMENT #9

Answer the following problems and provide a supporting solution and journal entries for each
question.
Do this in google docs instead of spreadsheet.

Shawn Corporation has two branches, Baguio Branch and Sagada Branch. The home office
shipped P8,000 in merchandise to Baguio Branch and prepaid the freight charges of P500. A
short time thereafter, Baguio Branch was instructed to reship this merchandise to Sagada
Branch at a prepaid freight cost of P700. Freight charges for this merchandise normally cost at
P800 when shipped from home office directly to Sagada Branch.

1. Prepare the necessary entries on the book of Baguio Branch.

BOOKS OF BAGUIO BRANCH
Shipment From Home Office P 8,000
Freight-In 500
Home Office P8,500
Home Office P 9,200
Shipment From Office P9,200

2. Prepare the necessary entries on the book of Sagada Branch.

BOOKS OF SAGADA BRANCH

Shipment From Home Office P8,000
Freight-In 800
Home Office P 8,800

3. Prepare the necessary entries on the book of home office.

Books of the Home Office

Investment In Baguio Branch P 8,500

Shipment To Baguio Branch 8,000
Cash 500

Investment In Sagada Branch P8,000

Inter-Branch Freight Expense 800
Investment In Sagada Branch P 8,800

Shipment To Baguio Branch P 8,000

Shipment To Sagada Branch P 8,000
Flavi Corporation recently made the decision to open a branch of its business in Bagac. Since
that time, the following transactions have occurred in connection with new operation:
● The home office acquired P18,000 in equipment to be used and recorded by the
branch.
● The home office paid P3,000 to lease a building for the last six months of this year.
This cost was charged to branch.
● Inventory costing P80,000 was shipped to a branch by the home office at a transfer
price of P100,000. The home office separately records all of its unrealized gains.
● The branch paid P11,000 for various operating expenses.
● The branch sold 75% of the inventory received, collecting P105,000 in cash.
● The branch transferred P60,000 cash to the home office.

4.
5. Prepare journal entries for both the home office and the branch to record previous
transactions.

HOME OFFICE JOURNAL ENTRY

INVESTMENT IN BRANCH P 18.000

CASH P 18,000

INVESTMENT IN BRANCH P 3.000

CASH P 3,000

INVESTMENT IN BRANCH P 100,000

SHIPMENT TO BRANCH P 80,000

ALLOWANCE FOR P20,000

OVERVALUATION

NO ENTRY

NO ENTRY

CASH P 60,000

INVESTMENT IN BRANCH P 60,000

 BRANCH JOURNAL ENTRY

EQUIPMENT P 18.000

HOME OFFICE P 18,000

RENT EXPENSE P 3.000

HOME OFFICE P 3,000

SHIPMENT FROM HOME OFFICE P 100,000

HOME OFFICE P100,000

OPERATING EXPENSES P 11,000

CASH P 11,000

CASH P 105,000

SALE P 105,000

HOME OFFICE P 60,000

CASH P 60,000

6. Prepare the worksheet entries that would bring about the combination of home office
and branch at the end of the period.
ELIMINATION ENTRIES

Home office 61,000

Investment in branch 61,000

Equipment purchased P 18,000

Rent paid 3,000
Inventory shipped 100,000
Cash transfer ( 60,000)
TOTAL P 61,000
Shipment to branch 80,000
 Allowance for overvaluation of branch inventory 20,000
Shipment from home office 100,000

Inventory-end (Statement of Comprehensive Income) 5,000

Inventory-end (Statement of Financial Posistion) 5,000

7. Produce entries to close out the operations of the branch at the end of the period.

SALES 105,000
ENDING INVENTORY(100,000 X 25%) 25,000
RENT EXPENSE 3,000
SHIPMENT FROM HOME OFFICE 100,000
OPERATING EXPENSES 11,000
INCOME SUMMARY 16,000

INCOME SUMMARY 16,000

HOME OFFICE 16,000