Student Name: ID #: Permit #:

Course: ACP 312 Examination: QAP 2 (MSA1) Page: 1/2

College: Term/Semester: 1st/1st S.Y.: 2023-2024
Total Points: 20 Exam Date: 2023-09-02

Instruction(s): Encircle the letter of your answer. No erasures (except for computations). For
questions requiring computations, provide solutions legibly. USE BLACK OR BLUE INK PEN ONLY.
ANSWERS IN PENCIL WILL BE INVALIDATED. (Theory – 1pt. each; Problems – 5 pts. each, no solution,
no point)

1. Shipments of purchases from suppliers is recorded in the home office as

a. Debit to investment in branch
b. Credit to shipments to branch
c. Not recorded at all
d. Debit to purchases

2. Shipments to branch, at the end of the period, is

a. Added to purchases
b. Deducted to purchases
c. Added from gross profit
d. Deducted from the cost of goods sold

3. A plant asset of the branch is carried in the books of the home office. Thus, the branch
will record:
a. Debit to asset
b. Credit cash
c. Credit accumulated depreciation
d. Debit to depreciation expense

4. The Income: Branch ledger account is maintained in the accounting records of:
a. The home office only
b. The branch only
c. Both home office and branch
d. Neither home office nor the branch

5. Statement 1: When inventory is received from the home office, a branch increases its home
office account.
Statement 2: Reciprocal home office and branch accounts are eliminated when home office and
branch financial statements are combined for external reporting.
a. True, True
b. True, False
c. False, True
d. False, False

6. The home office account of the branch has an unadjusted balance of 20,950. The following
are the reconciling items based on the findings:
 A debit of 2,000 in the branch current account was erroneously recorded by the branch
as 200.
 A debit of 4,000 in branch current account because of shipment to branch was not
recorded by the branch.
 Branch’s trade accounts receivable was collected by home office worth 500. No entry
was reflected in the branch’s books.
 An equipment worth 1,500 was paid by the branch but must be carried in the books of
the home office. The purchase was not recorded by the home office.
 Trade accounts receivable of the home office was collected by the branch. No entry
was recorded in the home office’s books.
What is the unadjusted balance of the investment in branch account?
a. 25,260
b. 26,250
c. 26,750
d. 26,000

7. Tagum Supply Company is engaged in merchandising both at its Home Office in Manila and its
Branch in Davao City. Selected accounts were taken from the trial balances of the Home
Office and the Branch as of December 31, 2023 follow:

© 2011 by Accounting Education, University of Mindanao

Student Name: ID #: Permit #:
Course: ACP 312 Examination: QAP 2 (MSA1) Page: 2/2
College: Term/Semester: 1st/1st S.Y.: 2023-2024
Total Points: 20 Exam Date: 2023-09-02

Debits Manila Davao Branch

Inventory, beg. 23,000 11,550
Davao branch 58,300
Purchases 190,000 -
Freight from HO - 5,500
Expenses 52,000 28,000
Credits
Home office - 53,300
Sales 155,000 140,000
Sales to branch 110,000 -
Allow. for MU 1,000 -

Additional information:
 The Davao City branch gets all of its merchandise from the Home Office. The HO bills
the goods at cost plus 10% mark-up. At December 31, 2023, a shipment with a billed
value of 5,000 was still in transit. Freight on this shipment was 250 as os to be
treated as part of inventory.
 Inventories on December 31, 2023:
Home office, at cost 30,000
Branch, at billed price (excluding freight of 520) 10,400

Compute the (1) net income of the HO from own operations, and (2) the net income of branch
in so far as HO is concerned.
a. 30,470; 870
b. 20,000; 10,470
c. 20,000;870
d. 30,470;10,470

8. On October 1, 2023, the Greenery Main Office established a sales agency in Tagum.
 The main office sent samples of its merchandise amounting to 8,400 and working fund
amounting to 72,000 to be maintained on the imprest basis. The samples were intended
to last until June 1, 2024.
 During the first two months of operations, the agency transmitted to the home office
sale of goods costing 291,600, but the home office were not able to fill up 25% of
the said transmitted sales order.
 Collections from customers amounted to 73,941, net of 2% sales discount.
 Payments made by the agency during October and November were as follows:
Rent (annual) – 57,600
Advertising expense – 5,600
Utilities – 7,200
 It purchased equipment worth 9,000 which will be depreciated at 20% per annum.
 The gross profit on sales agency is 20% of sales.
The net income of the agency for the two (2) months ended November 30, 2019 is
a. 27,366
b. 23,663
c. 28,366
d. 26,833
-----END OF EXAMINATION-----

© 2011 by Accounting Education, University of Mindanao