Problem 1

a. Sales 130,000
Less: Cost of Sales 93,000
Gross Profit 37,000

Less: Other Expenses 11,700

Expenses from Replenishment 6,850
Samples 5,000 23,550
Net Income 13,450

b. Samples- Agency 13,000

Working Fund 10,000
Shipments to Agency 13,000
Cash 10,000

Accounts receivable 130,000

Sales- Agency 130,000

Cash 91,000
Accounts Receivable 91,000

Expenses- Agency 11,700

Cash 11,700

Expenses- Agency 6,850

Working Fund- Agency 6,850

Cost of Sales 93,000

Shipments to Agency 93,000

Loss 5,000
Samples 5,000

Problem 2 Branch Account Home Office Account

a. Beginning Balance 15,000 (15,000)
Shipment 37,000 (32,000)
Expense allocation 15,400 (14,500)
Note collected by branch 2,000 (2,100)
Branch remittance (36,000) 42,000
Fixed Asset purchased by branch (5,000) 5,000
Merchandise returned by branch 3,000_
Unadjusted Balance 28,400 (13,600)
Unadjusted Balance 28,400 (13,600)
Adjustments:
Shipment (5,000)
 Expense allocation (900)
Note collected by branch 100
Branch remittance (6,000)
Fixed Asset purchased by branch
Merchandise returned by branch (3,000) _
Adjusted Balance 19,500 (19,500)

Problem 3
a. Adjusting Entries
Home Office Books
Depreciation Expense 5,900
Accumulated Depreciation 5,900

Inventory, end 242,500

Inventory, beg 200,600
Income Summary 41,900

Branch Books
Depreciation Expense 3,250
Accumulated Depreciation 3,250

Inventory, end 117,500

Inventory, beg.
Income Summary 117,500

b. Closing Entries
Home Office Books
Inventory, end 242,500
Sales 525,000
Shipment to Branch 251,000
Inventory, beg 200,600
Purchases 612,500
Operating Expenses 133,000
Depreciation 5,900
Income Summary 66,500

Branch 66,500
Income Summary 66,500

Income Summary 67,250

Retained Earnings 67,250

Branch Books
Inventory, end 117,500
Sales 330,000
 Shipments from Home Office 251,000
Purchases 112,500
Operating Expenses 80,000
Depreciation Expenses 3,250
Income Summary 750

Income Summary 750

Home Office 750

c. Elimination Entries
Home Office 197,250
Branch 197,250

Shipments to Branch 251,000

Shipments from Home Office 251,000

d. e. f. Home Office Branch Total

Sales 525,000 330,000 855,000
Less: Cost of Sales
Inventory, beg. 200,600 200,600
Purchases 612,500 112,500 725,000
Shipments to Branch (251,000) (251,000)
Shipments from Home Office 251,000 251,000
Inventory, end (242,500) (117,500) (360,000)
Gross Profit 205,400 84,000 289,400
Less:
Operating Expenses 133,000 80,000 213,000
Depreciation Expenses 5,900 3,250 9,150
Net Income 66,500 750 67,250

Problem 4
a. Mark up on Current Billing 10,000
Current Shipment (÷) 40,000
Gross Profit Rate 25%

01/01/17
Inventory of Home Office 80,000
Inventory of Branch 7,500
Inventory of Branch- from outsider 18,375
Inventory 105,875
01/31/17
Inventory of Home Office 55,000
Inventory of Branch 5,500
Inventory of Branch- outsider 19,500
Inventory 80,000
 b. Home Office Branch Total
Inventory, beg 80,000 25,875 105,875
Purchases 210,000 20,000 230,000
Shipments to Branch (30,000) (30,000)
Shipments from Home Office 30,000 30,000
Inventory, end (55,000) (25,000) (80,000)
Cost of Sales 205,000 50,875 255,875

c. Sales 78,500
Less: Cost of Sales 50,875
Gross Income 27,625
Less: Expenses 12,500
True Income of the Branch 15,125

d. Home Office Branch Total

Sales 300,000 78,500 378,500
Less: Cost of Sales 205,000 50,875 255,875
Gross Income 95,000 27,625 122,625
Less: Expenses 60,000 12,500 72,500
Consolidated Net Income 35,000 15,125 50,125

Problem 5
a. True Income Reported by the Branch 156,000
Less: Net Income Reported by Branch 60,000
Realized Mark up 96,000

Inventory, beg (Home Office at billed price) 70,000

Current Shipment from Home Office (at billed price) 350,000
Less: Inventory, end (at billed price) (84,000)
Inventory sold from outsider (at billed price) 336,000
Less: Realized Mark up 96,000
Inventory sold from outsider (at cost) 240,000

b. Realized Mark up 96,000

Inventory sold from Outside (at cost) 240,000
Mark up at cost 40%

c. Ending Inventory from Home Office (at billed price) 84,000

Less: Ending inventory from Home Office (at cost) 60,000
Allowance for Overvaluation 24,000

Problem 6

a. Branch
Sales 3,360,000
(÷) 1.40
Cost of Sales 2,400,000
Less: Goods available for sale 2,700,000
Ending Inventory of Branch (at billed price) 300,000
 b. Home Office Branch Total
Inventory, beg 350,000 160,000 510,000
Purchases 6,250,000 6,250,000
Shipments from Home Office 2,000,000 2,000,000
Shipments to Branch (2,000,000) (2,000,000)
Goods Available for Sale 4,600,000 2,160,000 6,760,000
Less: Cost of Sales 4,200,000 1,920,000 6,120,000
Inventory sold from outsider (at cost) 400,000 240,000 640,000

c. d. e. Home Office Branch Total

Sales 5,880,000 3,360,000 9,240,000
Less: Cost of Sales 4,200,000 1,920,000 6,120,000
Gross Profit 1,680,000 1,440,000 3,120,000
Less: Operating Expenses 1,200,000 325,000 1,525,000
Consolidated Net Income 480,000 1,115,000 1,595,000

d. At billed price At cost Mark Up

Beginning Inventory from Home Office 200,000 160,000 40,000
Current Shipment from Home Office 2,500,000 2,000,000 500,000
Ending Inventory from Home Office (300,000) (240,000) (60,000)
Inventory Sold to outsiders 2,400,000 1,920,000 480,000

Problem 7
a. Branch Account HO Account
Transfer of Cash 15,750 (15,750)
Shipments of merchandise 125,000 (100,000)
Purchase of Merchandise from other supplier
Branch Sales
Allocation of Advertising Expense 3,500
Operating Expense of Branch paid by Home Office 61,250 (61,250)
Branch Remittance 29,750
Unadjusted Balance 205,500 (147,250)

b. Unadjusted Balance 205,500 (147,250)

Shipments of merchandise (25,000)
Allocation of Advertising Expense (3,500)
Branch Remittance (29,750) _
Adjusted Balance 175,750 (175,750)

c. d. As Reported True Income

Sales 245,000 245,000
Less: Cost of Sales
Inventory, beg
Purchases 89,250 89,250
Shipments from Home Office 125,000 100,000
Inventory, end (58,500) (51,000)
Gross Profit 89,250 106,750
Less: Expenses 64,750 64,750
Net Income 24,500 42,000
 At billed price At cost Mark Up
Beginning Inventory from Home Office
Current Shipment from Home Office 125,000 100,000 25,000
Ending Inventory from Home Office (58,500) (51,000) 7,500
Inventory Sold to outsiders 66,500 49,000 17,500

Problem 8
a. Inventory, beg. (at billed price) 165,000
(×) 80%
Inventory, beg. (at cost) 132,000

b. Shipments from Home Office

From Outsider From Home Office Total
Sales 9,000 160,000 169,000
Less: Sales Return 3,750 3,750
Net Sales 5,250 160,000 165,250
(÷) 1.20 1.25 1.25
Cost of Sales 4,375 128,000 132,200

Inventory, beg. 165,000

Shipment from Home Office 100,000
Purchases 7,500
Goods Available for Sale 272,500
Less: Cost of Sales (132,375)
Inventory, end 140,125

Inventory from Outsider 3,125

Inventory from Home Office 109,600
Inventory destroyed by fire (at cost) 112,725

Shipments from Outsider

From Outsider From Home Office Total
Sales 9,000 160,000 169,000
Less: Sales Return (3,750) (3,750)
Net Sales 9,000 156,250 165,250
(÷) 1.20 1.25 1.25
Cost of Sales 7,500 125,000 132,200

Inventory, beg. 165,000

Shipment from Home Office 100,000
Purchases 7,500
Goods Available for Sale 272,500
Less: Cost of Sales 132,500
Inventory, end 140,000

Inventory from Outsider

Inventory from Home Office 112,000
Inventory destroyed by fire (at cost) 112,000
Problem 9
a. Home Office Books
Baguio Branch 10,650
Shipment to Branch (Baguio) 10,000
Cash 650
To record transfer of goods to Baguio.

Shipment to Branch (Baguio) 10,000

Laoag Branch 10,700
Excess Freight (Expense) 150
Baguio Branch 10,850
Shipment to Branch (Laoag) 10,000
To record reshipment.

Freight from HO to Baguio 650

Freight from Baguio to Laoag 200
Total Freight 850
Less: Normal Freight from HO to Laoag 700
Excess 150

BAGUIO BRANCH BOOKS:

Shipment from Home Office 10,000
Freight In 650
Home Office 10,650
To record goods received from HO.

Home Office 10,850

Shipment from Home Office 10,000
Freight In 650
Cash 200
To record shipment from Baguio to Laoag.

LAOAG BRANCH:
Shipment from Home Office 10,000
Freight In 700
Home Office 10,700
To record goods received from HO.

b. HOME OFFICE BOOKS:

Baguio Branch 10,650
Shipment to Branch (Baguio) 10,000
Cash 650
To record transfer of goods to Baguio.

Shipment to Branch (Baguio) 10,000

Laoag Branch 11,000
Baguio Branch 10,850
Shipment to Branch (Laoag) 10,000
Excess Freight (Gain) 150
To record reshipment.
BAGUIO BRANCH BOOKS:
Shipment from Home Office 10,000
Freight In 650
Home Office 10,650
To record goods received from HO.

Home Office 10,850

Shipment from Home Office 10,000
Freight In 650
Cash 200
To record shipment from Baguio to Laoag.

LAOAG BRANCH:
Shipment from Home Office 10,000
Freight In 500
Home Office 10,500
To record goods received from HO