Question B:-

Unrealized profit in beginning inventory = 50000 – (50000 /1.25) = 10000

Unrealized profit in shipment from HO = 142500 – (142500/1.25) or 142500 – 114000 = 28500

Unrealized profit in ending inventory = 32000 – (32000 / 1.25) = 6400

Combined statements Workpaper

Item Trial balances Eliminations Combined

H.O Branch DR CR balances
Income statement:
Sales 962000 272000 1234000
Beginning inventory 120000 50000 10000 160000
Purchases 500000 28000 528000
Shipments from H.O 0 - 142500 142500 0 -
620000 220500 688000
Shipments to branch 1140000 0 114000 0
Ending inventory 98000 48000 6400 139600
Cost of goods sold 408000 172500 548400
Other expenses 272000 36000 . . . 308000
Net income to retained earnings 282000 63500 120400 152500 377600

Question C: - exercise 24-7

Question D:-

Subscriptions for 2016 = 34000 – 1400 + 1200 + 200 – 300 = 33700

Depreciation expenses for premises = 40000 – 36000 = 4000

Depreciation expenses for fixtures = 6000 – 4000 = 2000

Total depreciation expenses = 4000 + 2000 = 6000

Income & Expenditure account for the year ended 31 December 2016

Income :
Subscriptions 33700
Donations 15000
Total 48700

Expenditures :
Rates 1200
General expenses 28000
Repairs 8000
Depreciation expenses 6000 43200
Surplus of income over expenditures 5500

Accumulated fund at 31/12/2015 = 1400+40000+6000+2000 – 200 = 49200

Accumulated fund at 31/12/2015 = 1200+36000+4000+13800 – 300 = 54700 or = 49200 + 5500