MANUEL BOOK (MAIN BOOK) EXERCISES

Problem 2 (Special Procedures)

Merchandise from Home Office (at Billed Price)

Merchandise Purchased locally by the branch
Ending Inventory, 20% local purchases in april, 25% in May
Net Sales for the Month
Operating Expense

Gross Profit reported at Billed Price and at Cost

April
@Billed
a. Sales 175,000.00
Beginning Inventory 0.00
Purchases 40,000.00
Shipments from Home Office 100,000.00
Total Goods Available for Sale 140,000.00
Ending Inventory (30,000.00)
Outside (6,000.00)
from Home office (24,000.00)
Cost of Goods Sold 110,000.00
Outside 34,000.00
from Home office 76,000.00
Gross Profit 65,000.00
Operating Expenses (70,000.00)
Net Income(Loss) (5,000.00)

Checking Outside
Sales
Beginning Inventory 0.00
Purchases 40,000.00
Shipments from Home Office
Freight 0.00
Total Goods Available for Sale 40,000.00
Ending Inventory (6,000.00)
Cost of Goods Sold 34,000.00
Gross Profit
Operating Expenses
c. Net Income (Loss)

b.
Allowance for Markup (April)
Ending bal 4,800.00 0.00 Beg Bal
Realized 15,200.00 20,000.00 Shipments
20,000.00 20,000.00

Allowance fro Markup (May)

 Ending bal 12,750.00 4,800.00 Beg Bal
Realized 22,050.00 30,000.00 Shipments
34,800.00 34,800.00

Problem No. 3 (Special Procedures)

Home Office Books

a. Investment in Branch 260,000.00
Shipments to Branch
Allowance for Markup
Cash
To record shipments

Ending Invenrory 67,600.00

Beginning Inventory 0.00

Purchases 0.00
Shipments from Home Office 250,000.00
Freight In 10,000.00
Total Goods Available for Sale 260,000.00
Ending Inventory (67,600.00)
Cost of Goods Sold 192,400.00

Ending Inventory@BP 67,600.00

Total Goods Available for Sale @BP 260,000.00
Ratio of Goods not Sold 0.26

Total Goods Available for Sale@ Cost 210,000.00

Ending Inventory@ Cost
Freight In 2,600.00
Shipments 52,000.00

300,000.00
(192,400.00)
107,600.00
(75,000.00)
32,600.00

Investment in Branch 69,600.00

Income and Expense Summary

Income and Expense Summary 69,600.00

Retained Earnings
Problem no.7 (special Procedures)

Merchandise Inventory, beginning@Billed Price

Shipments from Home Office @Billed Price
Sales
Sales Return
Sales Allowances
Goods survived from fire

Sales 15,000.00
Less: Sales Retun (2,000.00)
Net Sales 13,000.00
Divided by: markup on sales 1.25
Cost of Sales@ Billed Price 10,400.00

Merchandise Inventory,beginning 26,400.00

Shipments from home office 20,000.00
Less: Cost of Sales@Billed Price (10,400.00)
Merchandise inventory, end@Billed Price 36,000.00
Less: Goods Servived @Billed Price (4,800.00)
Total Goods Destroyed@Billed Price 31,200.00
Divided by: 1.20
Total GoodsDestroyed@Cost 26,000.00

Question: sa point of view ni Branch, yung merchandise@BP ba ay considered at cost kay Branch?

Problem no. 9 (Reconciliation of Reciprocal Accounts)

Home Office
Unadjusted Balance 40,000.00
1) Shipments in Transit
2) Collection on behalf of HO 2,750.00
3) Erroneous Debit 2,000.00
4) Erroneous record of branch income (3,600.00)
5) Erroneous record of returns of other branch 2,200.00
Adjusted Balances 43,350.00

b) Unadjusted Home Office Equity balance 35,550.00

c) Closing Entries of the Home Office

Problem no. 11 (Reconciliation and Combined Financial Statements)

Home Office Branch STB

Unadjusted Balances 352,985.00 121,600.00 0.00
a)
b) 51,750.00 51,750.00
c)
d) 17,500.00
e) (50,000.00)
f) (95,000.00)
g) 17,135.00
Adjusted Balances 207,985.00 207,985.00

Allowance for Markup (April)

Ending bal 34,200.00 29,000.00 Beg Bal
Realized 106,550.00 111,750.00 Shipments
140,750.00 140,750.00

Home Office Branch

Cash 175,000.00 17,600.00
Receivabls 510,565.00 75,000.00
Inventories, January 1 341,000.00 184,300.00
Investment in Branch 207,985.00 0.00
Plant Assets 1,172,600.00
Other Assets 229,000.00
Purchases 2,000,000.00 40,000.00
Expenses 381,000.00 96,000.00
Shipments from Home Office w/ freight 0.00 873,885.00
Totals 5,017,150.00 1,286,785.00

Accounts Payable 300,000.00 158,800.00

Short Term Loans 16,100.00
Capital Stock 1,900,000.00
Retained Earnings 322,250.00
Home Office Equity 0.00 207,985.00
Sales 2,398,250.00 920,000.00
Shipments to Branch 45,000.00
Allowance for Markup, January 1 35,750.00 0.00
Totals 5,017,350.00 1,286,785.00
 April May
100,000.00 150,000.00
40,000.00 50,000.00
30,000.00 85,000.00
175,000.00 300,000.00
70,000.00 110,000.00

April May
@Cost @Billed @Cost
175,000.00 300,000.00 300,000.00
0.00 30,000.00 25,200.00
40,000.00 50,000.00 50,000.00
80,000.00 150,000.00 120,000.00
120,000.00 230,000.00 195,200.00
(25,200.00) (85,000.00) (72,250.00)
(6,000.00) (21,250.00) (21,250.00)
(19,200.00) (63,750.00) (51,000.00)
94,800.00 145,000.00 122,950.00
34,000.00 37,500.00 37,500.00
60,800.00 107,500.00 85,450.00
80,200.00 155,000.00 177,050.00
(70,000.00) (110,000.00) (110,000.00)
10,200.00 45,000.00 67,050.00

Home Total per Books Markup Total per GAAP

175,000.00 0.00 175,000.00
0.00 0.00 0.00 0.00
0.00 40,000.00 0.00 40,000.00
100,000.00 100,000.00 20,000.00 80,000.00
0.00 0.00 0.00 0.00
100,000.00 140,000.00 20,000.00 120,000.00
(24,000.00) (30,000.00) (4,800.00) (25,200.00)
76,000.00 110,000.00 15,200.00 94,800.00
65,000.00 80,200.00
(70,000.00) (70,000.00)
(5,000.00) 10,200.00
 Branch Books
Shipments form Home Office 250,000.00
200,000.00 Freight In 10,000.00
50,000.00 Home Office Current
10,000.00 To record receipt of shipments

Cash 300,000.00
Sales
To record cash collections

200,000.00
10,000.00
210,000.00
(54,600.00)
155,400.00

300,000.00 Sales 300,000.00

(155,400.00) Ending Inventory 67,600.00
144,600.00 Income and Expense Summary
(75,000.00)
69,600.00
Income and Expense Summary 335,000.00
Shipments from Home Office
69,600.00 Operating Expenses
Freight In

69,600.00 Income and Expense Summary 32,600.00

Home Office Current

Income and Expense Summary 37,000.00

 Home Office Current

26,400.00
20,000.00
15,000.00
2,000.00
1,000.00
6,000.00

Sales 15,000.00
Less: Sales Return (2,000.00)
Net Sales 13,000.00
Less: Goods survived (6,000.00)
Goods Destroyed sold 7,000.00
Divided by 1.25
Sales @billed Price 5,600.00
Divided by: 1.20
4,666.67

onsidered at cost kay Branch?

Branch Home Office Branch

35,550.00 Shipments from Home Office
5,800.00 Home Office Current
Investment in Branch 2,750.00
2,000.00 Accounts Receivable 2,750.00

Investment in Branch 2,000.00 Cash

43,350.00 Cash 2,000.00

Income and Expense Summary 3,600.00

Investment in Branch 3,600.00

SFHO
805,000.00 Home Office Suppliers Total per books
Beg. Inventory 145,000.00 39,300.00 184,300.00
51,750.00 Purchases 0.00 40,000.00 40,000.00
Shipments 856,750.00 0.00 856,750.00
Freight In 17,135.00 0.00 17,135.00
 TGAS 1,018,885.00 79,300.00 1,098,185.00
End. Inventory 262,200.00 32,000.00 294,200.00
COGS 756,685.00 47,300.00 803,985.00
856,750.00
Home Office
Investment in Branch 51,750.00
Sales 51,750.00

Sales 51,750.00
Allowance for Overvaluation 6,750.00
Shipments to Branch 45,000.00

Investment in Branch 17,500.00

Cash 17,500.00

Cash 50,000.00
Investment in Branch 50,000.00

Loan Payable 95,000.00

Investment in Branch 95,000.00

Investment in Branch 17,135.00

Cash 17,135.00

0.00
Checking Outside
Sales 300,000.00
Beginning Inventory 6,000.00
Purchases 50,000.00
Shipments from Home Office
Freight 0.00
Total Goods Available for Sale 56,000.00
Ending Inventory (21,250.00)
Cost of Goods Sold 34,750.00
Gross Profit
Operating Expenses
Net Income (Loss)
260,000.00

300,000.00

367,600.00

250,000.00
75,000.00
10,000.00

32,600.00
 37,000.00

5,800.00
ffice Current 5,800.00

2,000.00
Home Office Equity 2,000.00

Markup Per GAAP

29,000.00 155,300.00
0.00 40,000.00
111,750.00 745,000.00
0.00 17,135.00
140,750.00 957,435.00
(34,200.00) 260,000.00
106,550.00 697,435.00

Branch
Shipments from Home Office 51,750.00
Home Office Equity

Expenses 17,500.00
Home Office Equity

Home Office Current 50,000.00

Cash

Home Office Current 95,000.00

Cash

Freight In 17,135.00
Home Office Current
Home Total per BooksMarkup Total per GAAP
300,000.00 0.00 0.00 0.00
24,000.00 30,000.00 4,800.00 25,200.00
0.00 50,000.00 0.00 50,000.00
150,000.00 150,000.00 30,000.00 120,000.00
0.00 0.00 0.00 0.00
174,000.00 230,000.00 34,800.00 195,200.00
(63,750.00) (85,000.00) (12,750.00) (72,250.00)
110,250.00 145,000.00 22,050.00 122,950.00
(145,000.00) (122,950.00)
(70,000.00) (70,000.00)
(215,000.00) (192,950.00)
51,750.00

17,500.00

50,000.00

95,000.00

17,135.00