On January 2, 20XX, Elizabeth Company opened a new branch in a neighboring city.

The balance sheet of the home office

on January 2, 20XX is given below:

Elizabeth Company (Home Office)

Balance Sheet
January 2, 20XX
Assets Liabilities and Shareholder’s Equity

Cash 88,950 Accrued Expenses 1,875

Accounts Receivable 41,475 Accounts Payable 34,200
Merchandise Inventory 60,180 Share Capital, P20 par 75,000
Prepaid Expenses 2,700 Retained Earnings 105,630
Furnitures and Fixtures 30,000
Less: Accumulated Depreciation (6,600)

Total Assets 216,705 Total Liabilities and Shareholders’ 216,705

Equity
The following is the summary of the transactions of the home office and the branch for
20XX:

Home Office Transactions

a. Transfers of cash to branch, P63,750.

b. Transfers of merchandise to branch (billed at cost), P75,300.
c. Sales on account,P157,500.
d. Purchases on account,P183,750.
e. Collection of accounts, P170,400.
f. Payment of accounts,P186,000.
g. Expenses paid,P39,900.
h. Cash received from branch, P80,100.
i. Dividends paid, P15,000.

Adjusting
dat
a
on
De
ce
mb
er
31:
De
pre
ciat
ion
for
the
yea
r,
P1,
77
0.
Me
rch
and
ise
Inv
ent
ory,
P7
2,7
50.
Pre
pai
d
Ex
pen
ses,
P3,
07
5.
 Accrued Expenses, P2,025.

Branch Transactions

a. Cash received from home office,P63,750.

b. Merchandise received from home office, P75,300.
c. Sales on account,P99,000.
d. Purchases on account,P33,750.
e. Collections of accounts deposited to the credit of home office, P80,100.
f. Payment of accounts,P18,375.
g. Purchase of furniture and fixtures for cash, P12,000.
h. Expenses paid,P27,000.

Adjusting
dat
a
on
De
ce
mb
er
31:
De
pre
ciat
ion
for
the
yea
r,
P9
75.
Me
rch
and
ise
Inv
ent
ory,
P3
5,2
50.
Pre
pai
d
Ex
pen
ses,
P1,
12
5.
Accrued Expenses, P450.

Required:
1. Prepare the journal entries to record the foregoing transactions for the branch and the
 home office.
2. Prepare the journal entries to adjust and close the books for branch and the home office.
3. Prepare individual statements for the branch and the home office.
5. Prepare the combined statements for the branch and the home office.