GARCIA, ALMIRA C.

1. Prepare journal entries to record the foregoing transactions for;

Branch Books Home office
a. Cash 42,500 a. Investment in branch 42,500
Home Office 42,500 Cash 42,500
b. Shipment from home office 50,200 b. Investment in branch 50,200
Home office 50,200 Shipment to branch 50,200
c. Accounts Receivable 66000 c. Accounts Receivable 105,000
Sales 66,000 Sales 105,000
d. Purchases 22,500 d. Purchases 122,500
Accounts Payable 22,500 Accounts Payable 122,500
e. Cash 53,400 e. Cash 113,600
Accounts Receivable 53,400 Accounts Receivable 113,600
Home office 53,400
Cash 53,400
f. Accounts Payable 12,250 f. Accounts Payable 124,000
Cash 12,250 Cash 124,000

g. Expenses 26,600
Cash 26,600
g. Home Office 8,000 Furniture and fixtures 8,000
Cash 8,000 Investment in branch 8,000
h. Expenses 18,000 h. Cash 53,400
Cash 18,000 Investment in branch 53,400
i. Retained Earnings 10,000
Cash 10,000

2. Prepare individual statements for the branch and home office

Bread Company – Home Office
Income Statement
Year Ended December 31, 2020
Sales 105,000
Cost of sales
Merchandise inventory, beg. 40,120
Purchase 122,500
Goods available for sale 162,620
Shipment to branch 50,200
Goods available for own sale 112,420
Merchandise inventory, end 48,500 63,920
Gross profit 41,080
Expense 27,630
Net operating income 13,450
Branch income (loss) (1,400)
Net income 12,050

Bread Company – Branch

Income Statement
Year Ended December 31, 2020
Sales 66,000
Cost of sales
Purchases 22,500
Shipments from home office 50,200
Goods available for sale 72,700
Merchandise inventory, end 23,500 49,200
Gross profit 16,800
Expense 18,200
Net income (loss) (1400)

Bread Company – Home Office

Balance Sheet
Year Ended December 31, 2020
Assets
Cash 23,200
Accounts receivable 19,050
Merchandise inventory, end 48,500
Prepaid expenses 2,050
Furniture and fixtures 20,000
Less: Accumulated depreciation (5,580) 14,420
Branch furniture and fixtures 8,000
Less: Accumulated depreciation (650) 7,350
Investment in branch 30,550
Total assets 145,120
Liabilities and Stockholder's Equity
Liabilities
Accrued expenses 1,350
Accounts payable 21,300 22,650
Stockholders’ Equity
Capital stock 50,000
Retained earnings 72,470 122,470
Total liabilities and stockholders’ equity 145,120

Bread Company – Branch

Balance Sheet
Year Ended December 31, 2020
Assets
Cash 4,250
 Accounts receivable 12,600
Merchandise inventory, end 23,500
Prepaid expenses 750
Total Assets 41,100
Liabilities and Stockholder's Equity
Accrued Expenses 300
Accounts payable 10,250
Home Office 30,550
Total liabilities and stockholders’ equity 41,100

3. Prepare combined statements for the branch and the home office
Bread Company
Consolidated Income Statement
Year Ended December 31, 2020
Sales 171,000
Cost of sales
Merchandise inventory, beg. 40,120
Purchases 145,000
Goods available for sale 185,120
Merchandise inventory, end 72,000 113,120
Gross profit 57,880
Expenses 45,830
Combined operating income 12,050

Bread Company
Balance Sheet
Year Ended December 31, 2020
Assets
Cash 27,450
Accounts receivable 31,650
Merchandise inventory, end 72,000
Prepaid expenses 2,800
Furniture and fixtures 28,000
Less: Accumulated depreciation (6,230) 21,770
Total Assets 155,670
Liabilities and Stockholder's Equity
Liabilities
Accrued expenses 1,650
Accounts payable 31,550 33,200
Stockholders’ Equity
Capital stock 50,000
Retained earnings 72,470 122,470
Total liabilities and stockholders’ equity 155,670

4. Prepare the journal entries to adjust and close the books at the end of the period for:
 Branch Home office
Adjusting Entries
i. i. Expenses 1,180
Accum. Dep'n 1,180
Expenses 650 Investment in branch 650
Home office 650 Accum. Dep'n-branch 650
Prepaid Expenses 750 Prepaid Expenses 250
Expenses 750 Expenses 250
Expenses 300 Expenses 100
Accrued Expenses 300 Accrued Expenses 100

Closing Entries
a. Sales 66,000 a. Sales 105,000
Merchandise Inv., end 23,500 Shipments to branch 50,200
Income Summary 1,400 Merchandise Inv., end 48,500
Purchases 22,500 Merchandise Inv., beg. 40,120
Shipment from HO 50,200 Purchases 122,500
Expenses 18,200 Expenses 27,630
Income Summary 13,450

Home office 1,400 b. Branch loss 1,400

Income Summary 1,400 Investment in branch 1,400

c. Income Summary 1,400

Branch loss 1,400

d. Income Summary 12,050

Retained Earnings 12,050