No. 125 Brgy.

Saan Sebastian
Lipa City, Batang
gas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gm
mail.com

HOM
ME OFFIC
CE, BRAN
NCH and
d AGENC
CY

Prooblem 1: A ABC Corrp. operates a numb mber of braanches inn NCR. Onn June 300, 20x1, its Makatii
brannch showeed a Hom me Office account bbalance off P68,375 and the hhome officce books showed a
Makkati Invesstment in Branch account baalance of P63,875. The folloowing infoormation may helpp
in reeconcilingg both acccounts:
 A P300,000 shippment chaarged by H Home offiice to Makkati brancch was acttually sentt to and
retainned by Maalabon Braanch.
 A P377,500 shippment, inttended andd chargedd to Manila branch w was shippped to Makkati
branch and retaained the llatter.
 A P5,,000 emerrgency cassh transferr from Maarikina brranch was not takenn up in thee Home
Officee books
 Homee Office collects a M Makati branch accoounts receeivable of P9,000 annd fails too notify
the brranch
 Homee office w was chargeed for P3,0000 for merchandisse returnedd by Makaati branchh on June
28. Thhe merchaandise is iin transit.

Homme office erroneouusly recorrded Makkati branchh net income for M

May 20x1 at P40,,688. Thee
brannch reportted net inccome of P
P31,688.

Whaat is the aadjusted bbalance oof the Hom

me Officee and Invvestment iin Makatii branch rreciprocall
accoounts?

Prooblem 2: IICARE Coo. operatees a branch in Bacoolod. At cclose of thhe businesss on Deceember 31,,
20222, the Hoome Officce accountt in the boooks of thhe Bacolood branchh showed a credit bbalance off
P2,7784,300. The inteeroffice aaccounts w were in aagreementt at the bbeginning of the yyear. Forr
purpposes of rreconcilingg the interroffice accounts, thhe followinng facts w
were ascerrtained:

a. OOn Decemmber 29, 22022, thee branch ssent a cheeck for P P13,500 too its supppliers. Thhe branchh
eerroneouslly recordeed the trannsaction aas a remitttance to thhe home ooffice andd sent a coopy of thee
ddebit mem
mo to the hhome officce. The hhome officce recordeed this upoon receiviing the deebit memoo
oon Januaryy 4, 2023.

b. TThe homee office allocated ppromotionns and insurance eexpense tootaling P18,000 too Bacolodd
bbranch. T
The home office inaadvertentlly chargedd the saidd expense to Davaoo branch. Bacolodd
bbranch hadd not enteered the allocation aat year-endd.

c. HHome offiice debit mmemo forr P20,7000 regardinng transferr of fundss was recoorded twiice by thee
bbranch by debiting iits reciproocal accouunt.

d. A branch customer remitted P15,000 tto the hom me office. The home officee recordedd this as a
ccash collecction of itts own reeceivable oon Decem
mber 23, 22022. Uppon notificcation on the samee
yyear, the branch ddebited thhe amounnt to Recceivable ffrom Hom me Officee and creedited itss
reciprocal account.

e. A P105,0000 shipmeent, chargged by hoome officee to Bacoolod brancch, was acctually seent to andd
retained byy Leyte brranch.

f. T
The home office faiiled to takke up a P12,000 credit memoo from the branch.

g. BBranch stoore insuraance prem

miums of P P9,600 wwere paid bby the hoome officee. The hom me officee
ddebited Inssurance exxpense annd creditedd Cash inn its bookss. The braanch recorrded the aamount off
PP96,000 ass a liabilitty.

h. Innventory costing P
P39,000 w
was sent too the brannch by thee home offfice on D
December 12, 2022..
T
The brancch recognnized a liability byy creditinng Accounnts Payabble upon the receiipt of thee
innventory.

1 | Page
RFERRER/RLACO/ATANG/PDEJESUS
 No. 125 Brgy. Saan Sebastian
Lipa City, Batang
gas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gm
mail.com

i. FFreight chharge of P12,600 onn merchanndise shippped to thee branch w

was paid bby the home officee
aand was reecorded inn the brancch books as P1,2600.

j. A branch ccustomer remitted P63,000 tto the hom me office recordedd this cashh
me office.. The hom
ccollection on Decem mber 28, 2022. U Upon receiving a crredit mem
mo, the brranch recorded thee
trransactionn twice onn Decembber 30, 20222.

Thee unadjusted balancce of the bbranch currrent accouunt as of D

Decemberr 31, 20222 is:

mation are available in the books off

Prooblem 3: On Deceember 31, 2031, thhe followiing inform
Makkati brancch of ICAR
RE Corp.

P
Petty Cashh 236,250
A
Accounts R Receivablle, Dec. 31, 2030 213,000
M
Merchandiise Inventtory, Dec. 31, 2030 188,750
A
Accounts R Receivablle, Dec. 31, 2031 222,000
M
Merchandiise Inventtory, Dec. 31, 2031 202,500
S
Sales 681,750
S
Sales returrn 12,000
A
Accounts R Receivablle written off 5,000
S
Shipment ffrom homme office 551,500
E
Expenses ((paid by H
Home Offfice) 56,250

Thee cash colllection in 2031 werre remittedd to the H

Home Office

Whaat is the tootal amouunt remittaance to hoome officee?

Whaat is the nnet incomee of the brranch?

Prooblem 4: A ABC Corrp shipmennt to and from its N Navotas bbranch aree billed att 120% off cost. Onn
Deccember 311, Navotass branch rreported tthe follow
wing data aat billed pprices: Invventory, JJanuary 1,,
20220 P84,0000; shipmments receeived from m home office off P2,100,,000; shippment retturned off
P1220,000; annd inventoories on December 331 of P900,000.

Whaat is the bbalance oof the alloowance foor overvaluation off branch inventoryy on Deceember 31,,
befoore adjusttment?

Prooblem 5: A ABC estaablished a branch iin Cebu C City. Duriing 2020, the homee office shhipped too
the branch suupplies coosting P120,000 att a billed price of 20% aboove cost. T The invenntories off
suppplies at the branchh were ass followss: Januaryy 1, P2255,000 ; D December 31, P2700,000. Onn
Deccember 311, the homme officee hold invventories of P401,2250 whichh includes P26,2500 held onn
consignment.. Both loccations usee the perioodic invenntory methhod.

w much iss the invenntories in a combinned balancce sheet ass of Decem

How mber 31, 22020?

Prooblem 6: T The followwing inforrmation caame fromm the bookks and recoords of thee Home O Office andd
its bbranch. Thhe balancees are as oof Decembber 31, 20020, the foourth yearr of its opeeration.
H
Home offfice Brranch
Sales 300,0000 1770,000
Shipmeent to brannch 48,0000
Shipmeent from hhome officce 600,000
Purchaases 120,0000 366,000
Operatiing expennses 80,0000 422,000
Inventoory, Januaary 1, 2020 50,0000 322,000
Unrealiized profiit in brancch inventoory 17,2000

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RFERRER/RLACO/ATANG/PDEJESUS
 No. 125 Brgy. Saan Sebastian
Lipa City, Batang
gas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gm
mail.com

Theere are noo shipmennt in trannsit betweeen the HHome offfice and the brancch. Both shipmentt
accoounts are properlyy recordedd. The cllosing invventory oof the braanch at biilled price includee
merrchandise acquired from thee home offfice in thhe amounnt of P10,,800; P6,0000 acquiired from m
vendors for a total of P
P16,800. W
While the closing innventory oof the hom
me office is P18,0000.

How
w much neet incomee of the brranch in soo far as thhe home office is cooncern?

Prooblem 7: O On July 1, 2021, AApologize Co. estabblished tw

wo branchees: Manila and Queezon Cityy
brannches. Thhe home ooffice trannsferred P80,000 wworth of caash and P
P350,000 w worth of inventoryy
to iits Manilaa branch and instrructed Maanila to trransfer ¾ of the ggoods andd cash received too
Queezon Cityy. In addittion, on AAugust 1,, 2021, shhipments from hom me office were recceived byy
Mannila amouunting to P
P125,000 and the bbranch paiid freight costs amoounting too P6,500. 3/5 of thee
saidd shipmennts were ssold to ouutsiders. On Septeember 1, 22021, Maanila transferred haalf of thee
rem
maining Auugust shippments frrom the hhome office to Queezon Cityy, with Quuezon Citty branchh
paying freighht costs oof P2,5000. Had the merchaandise beeen shippeed from thhe home office too
Queezon City branch, oonly P1,9000 worth oof freight would haave been inncurred.

Quezon Ciity branchh account on the HO

Reqq. 1: How much is tthe balancce of the Q O books?

Reqq. 2: The bbalance off the Hom

me Office aaccount inn the bookks of Mannila:

Main Officce establisshed a salees agencyy in Pasayy

Prooblem 9: On Octobber 1, 20222, the Eastwood M
Cityy.

 The maain office sent sampples of its merchanddise amouunting to PP42,000 aand a workking fundd
amountting to P3660,000 to be maintaained on tthe impresst basis.

 The sammples sennt were inttended to last untill June 1, 22023. Durring the ffirst two m months off
operatioons, the aggency trannsmitted tto the hom
me office sale of gooods costinng P1,4588,000, butt
the hom
me office w were not aable to filll-up 25% of the saiid transmiitted sales orders.

 Collectiions from
m customerrs amountted to P3669,705, neet of 2% saales discoount.

 Paymennts made bby the ageency during October and Noovember w were as foollows: annnual rentt
of P2888,000, advvertising eexpense w
worth P28,000 and uutilities am
mounting to P36,0000.

 It also purchaseed an equuipment w

worth P455,000 whhich will be deprecciated at 20% perr
annum.

 The grooss profit rrate on saales agencyy order is 20% of ssales.

Net income oof the agenncy for thhe two months endeed Novem
mber 30, 20022 is

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RFERRER/RLACO/ATANG/PDEJESUS