Problem 1: Tywin Company has a branch in Casterly Rock and Kings Landing.

The reciprocal
accounts between the home office and the branches were in agreement at the beginning of 2020.
However, on December 31, 2020, the following balances are found in the books of the home office:

Investment in Casterly Rock Branch P186,500

Investment in Kings Landing Branch 84,000

Data for reconciliation of the reciprocal accounts are as follows:

a. On December 29, 2020, the home office has instructed Casterly Rock to transfer P74,000 cash to
Kings Landing. Casterly Rock’s branch recorded this transaction immediately. Upon receipt, Kings
Landing branch has recorded this transfer at P47,000. The home office, however, has not yet
recorded this inter-branch transaction as of the end of the year.
b. Tywin has transferred goods costing P28,900 to Casterly Rock and paid P2,500 shipping cost on
December 16, 2020. Casterly Rock shipped all of these goods to Kings Landing upon instruction
of the home office on December 30. Shipping cost is P3,600 freight collect. Had the goods been
shipped directly to Kings Landing from the home office, only P5,000 freight cost will be incurred.
The inter-branch shipment was not recorded by the branches and the home office as well.
c. Casterly Rock has collected cash of P5,750 from one of Kings Landing branch’s customers. This
transaction is not yet recorded by the latter and the home office.
d. The home office has already allocated P11,000 and P9,000 of expenses to Casterly Rock and
Kings Landing, respectively. The branches are not yet notified.
e. Casterly Rock remitted P14,300 cash to the home office on December 12, 2020. The home office
failed to record this remittance.
f. Kings Landing branch returned goods costing P6,850 to the home office. The goods were shipped
on December 19 and received on December 24, but no entries have been made in the home
office books.

What is the unadjusted balance of the HO-Current account in Casterly Rock’s books?

What is the unadjusted balance of the HO-Current account in Kings Landing?

Problem 2: On September 1, 2020, Alabang Main Office established two branches: Ortigas and
Makati branches. The following transactions occurred for 2020:

a. The home office transferred P320,000 worth of cash and P1,400,000 worth of inventory to its
Ortigas branch. The home office transfers merchandise to its branch at a mark-up of 25% above
cost.
b. The home office instructed Ortigas to transfer 75% of the goods and cash received to Makati.
c. In addition, on October 1, 2020, shipments from home office were received by Ortigas amounting
toP500,000 at cost and the branch paid freight costs amounting to P26,000.
d. 60% of the said shipments were sold to outsiders.
e. On November 1, 2020, Ortigas transferred 50% of the remaining October shipments from Alabang
to Makati, with Makati branch paying freight costs of P10,000.
f. Had the merchandise been shipped from Alabang to Makati City branch, only P7,600 worth of
freight would have been incurred.

How much is the balance of the Makati branch account on the Home Office books?

Problem 3: Diana Corporation has two branches to which merchandise is transferred at cost plus
20%, plus freight charges. On November 30, 2020, Diana shipped merchandise that cost P5,500 to
its Cebu branch, and the P200 shipping charge was paid by Diana. On December 15, 2020, the
Ilocos branch encountered an inventory shortage, and the Cebu branch shipped the merchandise to
the Ilocos branch at a freight cost of P160 paid by the Cebu branch. Shipping charges from the home
office to the Ilocos branch would have been P175. If the merchandise is unsold at year end, at what
amount will the inventory be recorded in the (1) books of the branch and (2) consolidated books?