1. An analysis of Thrift Corp’s unadjusted prepaid Payables, beg…………………………… 19, 000
220,600
expenses account at December 31,2013 revealed
the following:
 An opening balance of 1,500 for Thrifts
comprehensive insurance policy. Thrift
had paid an annual premium of 3,000
on July 1, 20X2.
 A 3,200 annual insurance premium
payment made July 1, 20x3.
 A 2,000 advance rental payment for a
warehouse.
Thrifts leased for one year beginning January 1, 2004. In its
December 31, 20X3 balance sheet, what amount should
thrift report as repaid expenses?
2. The balance in retained earnings at December
31, 2003 was 810,000 and at December 31, 2004
was 654,000. Net income for 2004 was 563,000.
A stock dividends was declared and distributed
which increased common stock of 225,000 and
paid-in-capital of 125,000. A cash dividend was
declared and paid. The amount of cash dividend
was:
3. On April 1, 2008, Ivy began operating a service
proprietorship with an initial cash investment of
1,000. The proprietorship provided 3,200 of
services in April and received full payment in
May. The proprietorship incurred expenses of
1,500 in April which were paid in June. During
may, Ivy drew 500 against her capital account.
What was the proprietorship’s income for the
two months ended May 31, 2008 under the
following methods of accounting?
4. Entity Co. uses the cash basis of accounting and
reported income of 87,000 in 20X1. The
following items were considered in the
computation of the cash basis net income.
Inventory, beg…………………………. 12, 000
Inventory, end…………………………. 18, 000
Receivable, beg……………………….. 40, 000
Receivable, end……………………….. 38, 000
Shipments from home office………………..
Payables, end…………………………… 25, 000 Expenses (paid by Home office0………….22, 500
The accrual basis income is: If all cash collections in 2016 were remitted to Home
Office, the total remittances amounted to:
5. Information on an entity accounts is shown a. 262,300 c. 264,300
below: b. 266,800 d. 267,100
Current tax payable, beg……………… 150,000 3. A branch store in Caloocan was established by
Current tax payable, end……………….. 400,000 Carlo Company on March 1. Merchandise was
Increase in deferred tax liability ……. 60,000 billed to the branch at 125%. Shipments of
Increase in deferred tax assets…….. 20,000 merchandise were as follows:
Income tax paid……………………………. 280,000 March 5………………...120,000 (at billed price)
How much is the net income tax expense for the period? Mach 10………………….50, 000 (at billed price)
March 20………………..35,000 (at billed price)
1. The National Home Company ships and bills On March 22, the branch returned defective merchandise
merchandise to its provincial branch at cost. The worth 3,050. On March 31, the branch reported a net loss
branch carries its own accounts receivable and of (6,200) and merchandise inventory of 85,000.
makes its own collections. The branch also pays
its expenses. In the home office books, the cost merchandise sold by
Debit Credit branch was:
Cash P 11,900
National Hoe Co. Current 90,000 a. 161,560 c. 116,950
Shipments from National 120,000 b. 93,560 d. 161,950
Home Co.
Accounts Receivables 62,500 4. Leila Co.’s Clark branch submitted the following
Expenses 8,100 data for 2016,ts first year of operations:
Sales 112,500
Total 202,500 202,500 Sales………………………………………………203,599 cr.
December 31 inventory 30,00 Shipments from home office…………186, 120 dr.
Compute the (1) net profit of the branch, and (2) the Operating expenses………………………...18, 755 dr.
branch current account in the home office books: Home Office-current…………………………48,125 cr.
Shipments to the branch are billed at cost. The December
a. (1) 22,500 (2) 90,000 31 inventory of the branch was 25, 245. What is the
b. (1) 21,300 (2) 134,400 correct balance of December 31, 2016 of the branch
c. (1) 14,400 (2) 104,400 account-current as per home office book?
d. (1) 14,400 (2) 90,000 a. 46,750 c. 65,505
b. 48,125 d. 71,995
2. On December 31, 2016 the following data are in
the records of the Cebu City branch of the Claire 5. The following information pertains to shipments
of merchandise from home office to branch
Company:
during 2016:
Petty cash…………………………………………….. 94,500 Home office’s cost of merchandise……..160,000
Accounts receivable, Dec. 31, 2015………. 85,200 Intracompany billing…………………………..200,000
Merchandise inventory, dec.31, 2015….. 75,500 Sales by branch……………………………250,000
Accounts receivable, Dec. 31, 2016………. 88,800 Unsold merchandise at
Merchandise inventory, Dec. 31, 2016……81,000 Branch on Dec. 3, 2016………………..20,000
Sales…………………………………………………….272, 700 In the combined income statement of home office and
Sales returns…………………………………………..4, 800 branch the year ended December 31, 2016, what amount
Accounts receivable written off……………….2, 000 of the above transaction should be included in sales?
a. 250,000 c. 200,000
 b. 230,000 d. 180,000 For the month just ended: Expenses 29,700
The total cost of goods of The amount of Total 694,100 694,100
6. Barros Corporation shipments to and from its Aparri Branch at cost (net allowance for Clark reported an ending inventory of 138,600. Shipments
Brail City branch are billed a 120% at cost. On of overvaluation) overvaluation that was are billed at a mark-u of 40% on cost. What is the real net
December 31, Brazil branch reported the realized from branch income of Clark branch?
following data, at billed prices; inventory, sales.
January 1, of 33,600; shipments received from a. 2,820,000 400,000 a. 70,600 c. 100,000
home office of 840,000; shipments returned of b. 2,470,000 350,000 b. 92,400 d. 108,900
48,000 and inventory, December 31 of c. 2,770,000 740,000 12. The Quezon City sales company established a
36,000.what is the balance of the allowance for d. 2,470,000 390,000 branch in Dumaguete City early last year. It
over-valuation of branch inventory on December shipped merchandise and billed the branch for
31 before adjustments? 300,000 prior to its opening. For the year, it
a. 5,600 c. 6,000 9. Fisher Company opened its Tuguegarao branch
made additional shipments at billed price of
b. 137,600 d. 145,600 on January 1, Merchandise shipments from
120,000. Within the year, the branch shipped
7. The Cindy owns the Highest Crown in Dipolog home office during the month, billed at 120% of
back 7,500 inventory and got the credit memo
City and a branch in Dapitan City, during 2016, cost, and is 125,000. Branch returned damaged
the home office shipped to the branch supplies for said returns. On the last working day of the
merchandise worth 15,620. On January 31, the
costing 120,000 at a billed price of 20% above year, an inventory count was made. Ending
branch reported a net loss of 2,270 and an
cost. The inventories of supplies at the branch inventory of 185,000 was established consisting
inventory of 84,000. What is the net income
were as follows; January 1, 2016, 90,000; of purchases fro third parties at 20,000 with the
(loss0 of the branch to be taken up in the books
December 31, 2016 108,000. On December 31, balance coming from home office shipment at
of the Home office?
2016, the home office holds inventories of billed price, the home office billed the branch of
a. (1,690) c. (2,270)
160,000 which includes 10,500 held on 20% above cost. The total purchases of the
b. 6,500 d. 1,960
consignment. Both locations use the periodic branch from outside suppliers amounted of
inventory method. 10. The Robert Corporation established its Bulacan
72,500. The total cost of goods available for sale
How much is the inventories in a combined balance branch in January 2016. During its first year of
by the branch at cost (net of overvaluation and
sheet as of December 31, 2016? operations, home office shipped to its Bulacan
returns) amounted to;
a. 201,000 c. 270,000 branch merchandise worth 130,000 which
a. 416,250 c. 435,200
b. 240,000 d. 300,000 included a markup of 15% on cost. Sales on
b. 422,500 d. 485,000
account totaled 250,000 while cash sales
8. The Aparri branch of Cagayan products, Inc. 13. The home office of Glendale Company, which
amounted to 80,000. Bulacan reported operating
merchandise from third parties and receives uses the perpetual inventory system, bills
expenses of 38,000 and ending inventory of
merchandise from the home office for which it is shipments of merchandise to the Montrose
15,000, at billed price. In so far as the home
billed at 20% above cost. Below are excerpts Branch at a markup of 25% on the billed price.
office is concerned, the real net income of
from the trial balance and data in the home On August 31, 2016, the credit balance of the
Bulacan is;
office and Aparri branch for the month just home office’s allowance for overvaluation of
a. 82,000 c. 177,000
ended. inventories-Montrose branch ledger account was
b. 147,000 d. 192,000
Home office books: 60,000.on September 17, 2016 the home office
Cr. Allowance for overvaluation 11. The Clark branch of Freeport Corporation
shipped merchandise to the branch at a billed
Of branch merchandise…………………….740,000 submitted the following trial balance as of 30
price of 400,000. He branch reported an ending
Cr. Shipment to branch…………………….1,700,000 June 2016:
inventory, at billed price of 160,000 on
Branch Books:
Debit Credit September 30, 2016.Compue the realized gross
Dr. Beginning inventory……………………2,880,000
Cash 28,600 profit?
Shipments from home office………2,040,000
Purchases…………………………………….820,000 Accounts Receivable 173,800 a. 20,000 c. 120,000
Month-end additional data: Shipments from home 462,000 b. 28,000 d. 160,000
Ending inventory of branch……………….2,920,000 office 14. Tillman textile Company has a single branch in
From Home Office at Bp……..2,340,000 Home office-current 324,500 Bulacan. On March 1, 2016 the home office
From outsiders, at cost…………580,000 Sales 369,600 accounting records included on Allowance for
 overvaluation of inventories-Bulacan branch d. 22,750 net income month were billed at 125,000. The branch
ledger account with a credit balance of 32,000. 17. The account balances shown below were taken returned damaged merchandise worth 10,000.
During March, merchandise costing 36,000 was from the trial balances submitted to Bon-Apetit Inter-office shipments ae billed uniformly at
shipped to the Bulacan branch and billed at a Corporation by its Alabang branch: 125% of cost. On May 31, 2016, the branch
price representing a 40% markup on the billed reported a net loss of 52,500 and an inventory of
price. On March 31, 2016, the branch prepared Debit Credit 150,000.what is the branch net income (loss)
Petty cash fund 1,500 1,500
an income statement indicating a net loss of reflected in the combined income statements for
Accounts receivable 43,800 49,140
11,500 for March and ending inventories at May, 2016;
Inventory - 37,170
billed price of 25,000. What is the amount of a. (9500) c. (52,500)
Sales 173,180 195,120
adjustments for allowance for overvaluation of Shipments from home 107,450 136,080 b. 43,000 d. 95,000
inventories to reflect the true branch net (140%at cost) 20. Espana Branch as billed by home office for
income? Expenses 51,260 57,930 merchandise at 140% at cost. At the end of its
a. 82,000 c. 177,000 Accounts written off 1,220 1,920 first month, Espana branch submitted among
b. 147,000 d. 192,000 All branch collections are remitted to the home office. other things, the following data;
15. Charity Inc. established first branch on May 1, All branch expenses are paid out of the petty cash
2016. During the first month of operations, the fund. When the petty cash fund is replenished, he Merchandise from home office (at billed 98,000
price)
home office shipped merchandise to the branch branch debits appropriated expense accounts and
Merchandise purchased locally by branch 40,000
worth 138,000 which included a markup of 15% credits Home Office Current. The petty cash is
Inventory, December 31 of which 7,000 28,000
on cost. Sales for cash were 80,000 while sales counted every December 31, and its composition was are not local purchase
on account were 250,000.At months end, the as follows; Net sales for month 180,000
branch reported operating expenses of 38,000 The branch inventory at cost and the gross profit of the
and a closing inventory of 23, 000 at billed 12/31/15 12/31/16
branch as far as the home office is concerned are:
price.as far as the home office is concerned , the Currency and coins 580 860
true branch net income for May , 2016 is: Expense vouchers 920 640 Gross profit Ending inventory of
a. 82,000 c. 177,000 The branch inventory on December 31, 2016 was branch at cost
b. 147,000 d. 192,000 41,370. The correct branch net income for 1026 was: a. 22,000 92,000
16. Jaime marketing Co. opened a branch in San b. 92,000 22,000
a. 3,390 c. 41,070 c. 70,000 22,000
Fernando city at the beginning of 2016.the b. 3,670 d. 41,350 d. 90,000 20,000
branch extends credit, makes collections, pays 18. The Gift Co. has a branch in Dipolog City. During
expenses from cash receipts, and acquires goods 2016, the home office shipped to the branch
exclusively from the home office. During 2016, merchandise billed at 150,000 including a 21. The Manila branch of the Great Company is
goods shipped the home office to the branch, at markup at 20% on cost. The branch reports billed for merchandise by the home office at
a billing price of 125% of cost, amounted to 104, opening and closing inventories of 90,000 and 20%above cost. The branch in turn prices
000, of which 12,500 remained in the branch 120,000, respectively, while the home office has merchandise for sales purposes at 25% above
year-end inventory. Other branch transactions n a closing inventories of 210,000 which includes billed price. On February 16 all of the branch
2016 were as follows: sales, all on credit, merchandise which are held on consignment merchandise is destroyed by fire.no insurance
117,430; expenses of which 1,500 are unpaid at valued at 10,000. Both location use the periodic was maintained. Branch accounts shows the
year-end, 20,000; collections on account, after inventory system. What closing inventory would following information;
deducting discounts of 1,480, 84,000 and total be reported in the combined statement of
remittances to the home office, 62,500. As far as Merchandise inventory, January 1 (at billed 26,400
income for the year 2016?
the home office is concerned, the operations of price)
a. 296,000 c. 320,000
the branch in 2016 resulted in a : Shipments from home office (jan.1-Feb.16) 20,000
b. 300,000 d. 330,000
a. 4,450 net income Sales 15,000
19. Hope Corporation started operating a branch on
b. 9,550 net loss Sales returns 2,000
May 1, 2016 with a shipment of merchandise Sales allowance 1,000
c. 18,300 net income billed at 250,000.additional shipments during the
What was the cost of the merchandise destroyed by fire?
a. 36,000 c. 36,800
b. 30,667 d. 30,000
22. The home office bills its Aklan branch at 1255 of
cost. During the year 2016, goods costing
300,000 were shipped to the branch. The
account “allowance for overvaluation of branch
inventory”, after adjustments, shows a balance
of 14,000 at the end of the year.
Compute the amount of ending inventory at:
Cost Billed price
a. 56,000 56,000
b. 300,000 375,000
c. 56,000 70,000
d. 70,000 56,000
23. Lacoste Philippines has two merchandise outlets
its main store in manila and its cebu City branch.
For control purposes, all purchases are made by
the mian store, and shipments to the Cebu City
branch are at cost plus 10%. On January 1, 2016,
the inventories of the main store and the Cebu
City branch were 13,600 and 3,960 respectively.
During 2016, the main store purchased
merchandise costing 40,000 and shipped 40% of
these to the Cebu City branch.
At December 31, 2016, the following journal entry
was made to prepare the Cebu City branch books for
the next accounting period:
Sales …………………… 32,000
Inventory……………… 4,840
Inventory …………………….3,960
Shipments from
main store………………….17,600
Expense………………………10,480
Main store………………….. 4,800
(1) What was the actual branch income of 2016 on a
cost basis, assuming the use of the provisions of
the pas, and (2) if the main store has 11,200
worth of inventory on hand at the end of 2016,
the total inventory that should appear on the
combined balance sheet at December 31, 2016:
1 2
a. 4,800 15,600
b. 6,320 15,160
c. 6,320 15,600
d. 6,480 16,040
24. The Best Co. bills merchandise shipments in its
cavite City branch at 125% of cost. The branch, in
turns sells the merchandise it receives from the
home office at 25% above the billing price. On
august 1, 2016, all of the branch’s merchandise
stock was destroyed by fire. The branch records
that were recovered showed the following;
Inventory, January 1, 2016 (at billed 165,000
price)
Shipments received from home office, 110,000
Jan. to July (at billed price)
Purchases, at cost from outside 7,500
sources, all re-sold at a 20% mark-up
Sales 169,000
Sales returns and allowances 3,750
The Best Co. will file an insurance claim. How much is the
estimated cost of the merchandise destroyed by the fire?
a. 120,000 c. 140,000
b. 130,000 d. 150,000
25. On August 31, 2016, a fire destroyed
totally the rented “bodega” or
stockroom of Isabela Company. The
following are some of the data of the
company:
Merchandise inv. Dec.31…………………..110,000
For the period Jan. 1 – Aug. 31, 2016
Purchases……………………………..560,500
Freight In………………………………….5,600
Purchases returns…………………..10,200
Sales …………………………………...695,000
Sales returns and allowance…….7,500
Using a 20% gross profit rate, the cost of the
merchandise lost in the fire as:
a. 90,700 c. 88,400
b. 115,900 d. 63,200