Debit Credit Debit Credit

Cash 300,000 80,980

Accounts Receivable 438,000 207,500
Allowance for doubtful accounts 25,000
Inventories 280,000 15,000
Prepaid expenses 25,000 4,000
Furniture and Fixtures 100,000
Accumulated Depreciation F & F 10,000
Equipment 500,000
Accumulated Depreciation - Equipment 125,000
Investment in Branch 322,000
Accounts payable 90,000 50,000
Home Office 212,000
Common Stock, P20 par 900,000
Additional paid in capital 90,000
Retained Earnings 210,000
Sales 925,000 454,000
Purchases 570,000 125,000
Shipment to Branch 290,000
Shipment from Home Office 205,000
Operating expenses 130,000 78,520
Total 2,665,000 2,665,000 716,000 716,000
Accounts Title
Home Office Branch
ADVANCED ACCOUNTING PART 2
QUIZ

Problem A = The Miami Corporation operates Heat Branch.
The branch was established in year 2012. In year 2014, Miami
branch started to purchase merchandise from outsider. It is part
of the Home office policies that, the Home office carries all
recording of all plant assets transactions and maintains provision
for bad debts for the branch.

Unadjusted Trial balance of Miami and Heat December 31,
2014 is presented below:
Adjusting data: December 31, 2014

The following discrepancies were discovered and you were
advised to make all necessary adjustments to correct the
financial statement preparation.
On July 1, 2011 the Home office acquired five
equipment with a total cost of P500,000. When the
branch opened in 2012, two equipment were
transferred. On July 1, 2014, the branch sold one of
the equipment for P75,000 but failed to notify the Home
Office. Useful life of the equipment is 10 years.
On December 31, 2014, the branch sent a check for
P40,000 to the home office to settle its account. The
check was not delivered to the home office until
January 3, 2015.
On December 31, 2014, it was discovered that the
Home office transferred P50,000 account receivables
to branch as per customer advised and the account
was transferred February 1, 2014. On the same year,
the branch received notice from the family of the
customer that the customer was declared insolvent and
cannot able pay the company. The account must be
written off but fail to notify the Home office.
Furthermore, the branch wrote off P7,000 of its
customer account but fail to notify the Home Office.
Branch store insurance premium of P9,000 were paid
by the home office. The Branch recorded the amount
at P6,000.
There are still merchandises in transit transferred by
Home Office to branch. The merchandise was shipped
December 28, 2014.
Requirements: On December 31, 2014, determine the
following:
1. Branch total assets
2. Branch total liabilities
3. Home office total assets
4. Home office account before closing income
5. Investment in branch adjusted balance
6. Branch net income
7. Home office net income from own operation
8. Combined net income
9. Combined total assets
10. Combined total liabilities
11. Stockholders equity in the combined statement

Problem B = KCO Company had an agency in SM Cebu. For
the period just ended, the agency transactions showed the
following:
Receipt from sales 350,000
Disbursement
Purchases 400,000
Salaries and commissions 70,000
Rent 20,000
Advertising supplies 10,000
Other expense 5,000
The agency had P100,000 receivables and P50,000 payables
from suppliers as of the end of the period. Also, there were
inventories on hand of P90,000 and unused advertising supplies
of P6,000. The agency was set up as an experiment for one
period and would be closed if losses were incurred.
12. The agency operating result is:
Home Office Branch
Prepaid expense 20,000 8,000
Accrued expense 10,000 5,000
Bad debts expense 30,000 15,000
Depreciation expense
Furniture and Fixtures 8,000 2,000
Equipment 30,000 20,000
Inventory ending 185,000 75,000