ACCOUNTING FOR

SPECIAL TRANSACTIONS
Silva, Jaimeh Rose B.

Problems: PARTNERSHIP
1.
a) Cash 300,000
AAA, Capital 100,000
BBB, Capital 100,000
CCC, Capital 100,000
To record cash investments of each partner

b)

Cash 150,000
Inventory 150,000
AAA, Capital 300,000

To record cash contribution and inventory costing of AAA

Cash 200,000
BBB, Capital 200,000

To record cash contribution of BBB

Equipmen 150,000
t
CCC, Capital 150,000
To record the contributed
equipment of CCC

c)
100,00
Cash
0
Accounts Receivable 100,00
0
AAA, Capital 200,000
 To record additional contribution of AAA

Equipmen 400,000
t
BBB, Capital 400,000
To record additional contribution
of BBB

Memo: CCC is admitted as an Industrial Partner.

2.
a)
Cash 290,000
Accounts Receivable 275,000
Inventory 267,000
Equipment 325,000
Allowance for Bad Debts 80,000
Accounts Payable 250,000
DDD, Capital 437,000
FFF, Capital 390,000

To record all the investment of each partners

b)
Cash 150,000
Accounts Receivable 140,000
Inventory 135,000
Equipment 300,000
Allowance for Bad Debts 50,000
Accumulated Depreciation 60,000
Accounts Payable 100,000
DDD, Capital 515,000

To record the investments using the book of DDD

c)
Cash 140,000
Accounts Receivable 135,000
Inventory 128,000
Equipment 200,000
Allowance for Bad Debts 30,000
Accumulated Depreciation 20,000
Accounts Payable 150,000
DDD, Capital 403,000

To record the investments using the book of FFF

 3. Cash 900,000
GGG, Capital 450,000
HHH, Capital 450,000
To record the investments of each partner

4.
ADJUSTMENTS
III JJJ
III, Capital 18,750 JJJ, Capital 12,500
Allowance for Bad Debts 18,750 Allowance for Bad Debts 12,500

III, Capital 100,000 JJJ, Capital 80,000

(500,000 x 80% = 400,000 (400,000 x 80% = 320,000
500,000 – 400,000 = 100,000) 400,000 – 320,000 = 80,000)
Inventory 100,000 Inventory 80,000

III, Capital 25,000 JJJ, Capital 11,500

Furniture and Fixtures 25,000 Office Equipment 11,500

Prepaid Expenses 6,000 Prepaid Expenses 2,000

III, Capital 6,000 JJJ, Capital 2,000

Accounts Payable 3,000 Accounts Payable 1,000

Cash 3,000 Cash 1,000

III JJJ
Cash P147,000 P74,000
Accounts Receivable 375,000 250,000
Inventory 400,000 320,000
Furniture and Fixtures 575,000 180,000
Office Equipment 230,000 38,500
Prepaid Expenses 18,750 8,000
TOTAL ASSETS P1,745,750 P870,500

Allowance for Bad Debts P18,750 P12,500

Accounts Payable 897,000 359,000
Capital 830,000 499,000
TOTAL LIABILITIES AND CAPITAL P1,745,750 P870,500
a)
Cash 221,000
Accounts Receivable 625,000
Inventory 720,000
Furniture and Fixtures 755,000
Office Equipment 268,500
Prepaid Expenses 26,750
Allowance for Bad Debts 31,250
Accounts Payable 1,256,000
III, Capital 830,000
JJJ, Capital 499,000
To record all the investments of each partner

b)
Cash 221,000
Accounts Receivable 625,000
Inventory 720,000
Furniture and Fixtures 755,000
Office Equipment 268,500
Prepaid Expenses 26,750
TOTAL ASSSETS 2,616,250

c)

Allowance for Bad Debts 31,250

Accounts Payable 1,256,000
TOTAL LIABILITIES 1,287,250

d) III, Capital 830,000

e) JJJ, Capital 499,000

5. (74,000 x 50% = 37,000)
a)
Cash 258,000
Accounts Receivable 625,000
Inventory 720,000
Furniture and Fixtures 755,000
Office Equipment 268,500
Prepaid Expenses 26,750
Allowance for Bad Debts 31,250
Accounts Payable 1,256,000
III, Capital 830,000
JJJ, Capital 536,000
To record all the initial and additional investments of each partners

b)
Cash 258,000
Accounts Receivable 625,000
Inventory 720,000
Furniture and Fixtures 755,000
Office Equipment 268,500
Prepaid Expenses 26,750
TOTAL ASSETS 2,653,250

c)
Allowance for Bad Debts 31,250
Accounts Payable 1,256,000
TOTAL LIABILITIES 1,287,250

d) III, Capital 830,000

e) JJJ, Capital 536,000

6. (60:40)

III, Capital 830,000

JJJ, Capital 499,000
TOTAL CAPITAL 1,329,000
*III, Capital (1,329,000 x 60% = 797,400)
*JJJ, Capital (1,329,000 x 40% = 531,600)

a)
Cash 221,000
Accounts Receivable 625,000
Inventory 720,000
Furniture and Fixtures 755,000
Office Equipment 268,500
Prepaid Expenses 26,750
Allowance for Bad Debts 31,250
Accounts Payable 1,256,000
III, Capital 797,400
JJJ, Capital 531,600

b) Cash 221,000
Accounts Receivable 625,000
Inventory 720,000
Furniture and Fixtures 755,000
Office Equipment 268,500
Prepaid Expenses 26,750
TOTAL ASSSETS 2,616,250

c)
Allowance for Bad Debts 31,250
Accounts Payable 1,256,000
TOTAL LIABILITIES 1,287,250

d) III, Capital 797,400

e) JJJ, Capital 531,600

7.
KKK LLL MMM
Beginning, Capital – March 1, 2020 500,000 600,000 650,000
Additional Investments 150,000 50,000 100,000
Withdrawal (150,000) (100,000)
Ending, Capital 650,000 500,000 650,000
NET INCOME 150,000
a)
KKK LLL MMM TOTAL
Salaries 24,000 36,000 60,000
Interest 15,000 15,000 30,000
Bonus 6,000 6,000
Balance (Equally) 18,000 18,000 18,000 54,000
TOTAL 57,000 24,000 69,000 150,000

Bonu = % x BASIS
s
=10% (150,000 – Salaries – Interest)
=10% (60,000)
=6,000

KKK = 57,000
LLL = 24,000
MMM = 69,000

b)
KKK LLL MMM
Beginning, Capital – March 1, 2020 500,000 600,000 650,000
Additional Investments 150,000 50,000 100,000
Net Income 57,000 24,000 69,000
Less: Withdrawals (150,000) (100,000)
Ending, Capital – December 31, 2020 707,000 524,000 719,000
8.
Problems: CORPORATE LIQUIDATION 10
Problems: ACCOUNTING FOR HOME OFFICE, BRANCH AND AGENCY 10
1.
a)
Sales P120,000
Less: Cost of Goods Sold (93,000)
Gross Profit 27,000
Less: Agency Expenses P10,500
Expense Vouchers 6,850
Samples Expense (13,000 – 8,000) 5,000 (22,350)
NET INCOME P4,650

b)
Samples – Agency 13,000
Shipment to Agency 13,000

Working Fund – Agency 10,000

Cash 10,000

Accounts Receivable 120,000

Sales – Agency 120,000

Cost of Goods Sold 93,000

Shipment to Agency 93,000

Cash 91,000
Accounts Receivable 91,000

Expenses – Agency 10,500

Cash 10,500

Expenses 5,000
Samples – Agency 5,000

2.
Sales P64,380
a) Less: Cost of Goods Sold (48,285)
Gross Profit 15,555
Less: Agency Expenses P3,815
Samples Expense (15,750 – 10,075) 5,675 (8,860)
NET INCOME P6,695
 b)
Samples – Agency 15,750
Shipment to Agency 15,750

Working Fund 9,000

Cash 9,000

Accounts Receivable 64,380

Sales – Agency 64,380

Cost of Goods Sold 48,285

Shipment to Agency 48,285

Cash 20,400
Accounts Receivable 20,400

Expenses 3,815
Cash 3,815

Expenses 5,675
Samples – Agency 5,675

3.
a)
HOME OFFICE BOOKS BRANCH BOOKS
Beginning Balances P15,000 P15,000
Shipment at Cost 37,000 32,000
Expense Allocated to/from Branch 15,400 14,500
Note collected by Branch with/without interest 2,000 2,100
Branch Remittance/Cash remitted P36,000 P42,000
Fixed Asset purchased/charged to Home Office 5,000 5,000
Merchandise returned to Home Office 3,000
Unadjusted Balance P28,400 P13,600
b)
HOME OFFICE BOOKS BRANCH BOOKS
Unadjusted Balance P28,400 P13,600
Adjustments:
1. Error in recording expenses 900
2. Unrecorded interest 100
3. Shipment in-transit 5.000
4. Merchandise returned (3,000)
5. Branch remittance in-transit (6,000)
ADJUSTED BALANCE P19,500 P19,500

c)

Expenses P900
Home Office P900
To record the error in recording expenses

Branch 100
Interest 100
To record the unrecorded interest

Shipment from Home Office 5,000

Home Office 5,000
To record the shipment in-transit

Shipment to Branch 3,000

Branch 3,000
To record the merchandise returned

Cash 6,000
Branch 6,000
To record the branch remittance in-transit
4.
a) *BRANCH BOOKS

Depreciation Expense 3,250

Accumulated Depreciation 3,250
*HOME OFFICE

Depreciation Expense 5,900

Accumulated Depreciation 5,900

b)
*BRANCH BOOKS
Inventory, End P117,500
Sales 330,000
Inventory, Beg P0
Shipment from Home Office 251,000
Purchases 112,500
Operating Expense 80,000
Depreciation Expense 3,250
Income Summary 750

*HOME OFFICE
Inventory, End P242,500
Sales 525,000
Shipment to Branch 251,000
Inventory, Beg P200,600
Purchases 612,500
Operating Expense 133,000
Depreciation Expense 5,900
Income Summary 66,500

c)
Shipment to Branch 251,000
Shipment from Home Office 251,000

Home Office 196,500

Investment in Branch 196,500
d)
Sales P525,000
Less: Cost of Goods Sold (319,600)
Gross Profit 205,400
Less: Expenses (133,000 + 5,900) (138,900)
NET INCOME P66,500

e)
Sales P330,000
Less: Cost of Goods Sold (246,000)
Gross Profit 84,000
Less: Expenses (80,000 + 3,250) (83,250)
NET INCOME P750

f)

HO BRANCH CONSOLIDATED
Sales P525,000 P330,000 P855,000
Less: Cost of Goods Sold (319,600) (246,000) 565,600
Gross Profit 205,400 84,000 289,400
Less: Expenses (138,900) (83,250) 222,150
NET INCOME P66,500 P750 P67,250

5. a)
Billing rate = 40,000/30,000
= 133%

Home Office (24,500/133%) P18,421

From outsiders:
Branch 7,500
Home Office 80,000
Beginning Inventory at cost P105,921
Home Office (26,000/133%) P19,549
From outsiders:
Branch 5,500
Home Office 55,000
Ending inventory at cost P80,049
b)
Beginning Inventory (18,421+7,500) P25,921
Purchases 20,000
Shipment from Home Office (40,000/133%) 30,000
Total Goods Available for Sale 75,921
Less: Ending Inventory (19,549+5,500) 25,049
Cost of Sales of the Branch at cost P50,872

c)
Sales P78,500
Less: Cost of Sales 50,872
True Gross Profit of Branch 28,628
Less: Expenses 12,500
True Income of the Branch P15,128

d)
Sales P300,000
Cost of Sales:
Beginning Inventory P80,000
Purchases 210,000
Shipment to Branch (30,000)
Total Goods Available for sale 260,000
Ending Inventory (55,000) 205,000
Individual Gross Profit 95,000
Operating Expenses (60,000)
Individual Profit of Home Office P35,000

Individual Profit of Home Office P35,000

Individual Profit of Branch 15,128
Consolidated Net Income P50,128

6.
a)
Inventory, January 1 P70,000
Shipment from Home Office 350,000
Cost of Goods Sold from Home Office Available for Sale 420,000
Less: Inventory, December 31 84,000
Cost of Goods Sold from Home Office at billed price 336,000
Less: Overvaluation of Cost of Goods Sold
True Branch Net Income P156,000
Less: Branch Income reported 60,000 96,000
Cost of Goods Sold from Home Office at cost P240,000

Billing Rate = 336,000/240,000

= 140%

b)
Allowance for Overvaluation of Inventory = 84,000/(40%/140%)
= 24,000

7.
a)
Branch inventory, Beginning balance P200,000
Shipment from Home Office 2,375,000
Shipment in-transit
(2,000,000*125%) – 2,375,000 125,000
Total P2,700,000
Less: Cost of Goods Sold (3,360,000/140%) 2,400,000
Branch inventory, December 31 P300,000

b)
Branch Inventory, December 31 P300,000
Home Office Inventory:
Home office inventory, beginning P350,000
Purchases 6,250,000
Shipment to Branch (2,000,000)
Total 4,600,000
Less: Cost of Goods Sold
(5,880,000/140% 4,200,000) 400,000
Consolidated Inventory P700,000

c)
Sales P3,360,000
Cost of Goods Sold
Inventory, beginning P200,000
Shipment from HO
(2,375,000/125%) 1,900,000
Ending Inventory (300,000) 1,800,000
Gross Profit P1,560,000
Operating Expenses 325,000
True Profit of the Branch P1,235,000

d)
Sales (5,880,000+3,360,000) P9,240,000
Cost of Sales:
Inventory, beginning (350,000+200,000) 550,000
Purchases 6,250,000
Total Goods Available for Sales 6,800,000
Consolidated Ending Inventory 700,000 6,100,000
Gross Profit P3,140,000
Operating Expenses (1,200,000+325,000) 1,525,000
Consolidated Net Income P1,615,000

e)
Allowance for Overvaluation = 300,000*(40%/140%)
=P85,714

8.
a)
Baguio received cash from home office P15,750
Shipments to branch (100,000 x 125%) 125,000
Advertising expense 3,500
Operating expenses paid by the home office 61,250
Total Unadjusted Balance P202,500
Reconciliations:
Less: Branch remittance not yet recorded by the home office 29,750
Adjusted Balance P175,750

b)
Baguio received cash from home office P15,750
Shipments to branch (125,000 x 125%) 100,000
Operating expenses paid by the home office 61,250
Less: Branch remittance to home office 29,750
Total Unadjusted Balance P147,250
Reconciliations:
Shipments in transit (100,000 x 125% x 20%) 25,000
Advertising expense not yet recorded by branch 3,500
Adjusted Balance P175,750
c)
Sales P245,000
Shipment from home office (excluding in transit) P100,000
Purchases 89,250
Total goods available for sale 189,250
Ending inventory (21,000 + 37,500) 58,500
Less: Cost of Sales (130,750)
Gross Profit P114,250
Less: Advertising Expense ( 3,500)
Operating Expenses 61,250
Net Income by Branch P49,500

d)
Net income reported by Branch P49,500
Shipment from home office (excluding in transit) P100,000
Less: Ending inventory from shipments (37,500)
Cost of sales from home office 62,500
Multiply by: Mark Up rate (25/125) x 1/5
Realized Allowance for overvaluation 12,500
True Branch Net Income P62,000

9.
a)
Net sales P165,250
Divide by: pricing rate of the branch 125%
Branch beginning inventory at cost P132,200

b)
Inventory at cost
Beginning Inventory (165,000/120%) P137,500
Shipment from home office (100,000/120%) 83,333
Purchases 7,500
CGS at cost (132,200)
Cost of merchandise destroyed by fire P96,133
10.
a)
Home office books:
Investment in Baguio branch 10,650
Shipments to Baguio branch 10,000
Cash 650

Baguio branch books:

Shipments from home office 10,000
Freight-in 650
Home office 10,650

Freight from home office to Baguio branch P650

Freight from Baguio branch to Laoag branch 200
Total freight on indirect routing 850
Normal freight from home office to Laoag branch (700)
Excess freight P150

b)
Baguio branch books:
Home office 10,850
Shipments from home office 10,000
Freight-in 650
Cash 200

Laoag branch books:

Shipments from home office 10,000
Freight-in 700
Home office 10,700

Home office books:

Shipments to Laoag branch 10,000
Shipments to Baguio branch 10,000

Investment in Laoag branch 10,700

Loss on excessive freight 150
Investment in Baguio branch 10,850
Problems: REVENUE RECOGNITION: SALE OF GOODS AND SERVICES 5
Problems: REVENUE RECOGNITION: CONSIGNMENT SALES 5
Problems: REVENUE RECOGNITION: INSTALLMENT SALES 5
Problems: REVENUE RECOGNITION: FRANCHISING 5
Problems: REVENUE RECOGNITION: LONG-TERM CONSTRUCTION CONTRACT
5