The trial balances prepared for Attic Cat Co.

and its branch as of December 31, 2020 are shown below:

HOME OFFICE BRANCH OFFICE
DEBIT CREDIT DEBIT CREDIT
Cash P 33,200 p 22,700
Accounts receivable 29,400 21,000
Merchandise inventory January 1 22,000 25,000
Furniture & fixtures 17,200 10,500
Accum. Depr. - Fur. & Fix. P 4,900 p 2,300
Store supplies 2,200 900
Branch 151,000
Shipments to branch 200,000
Branch inventory allow 52,000
Account Payable 47,500 6,500
Home office 118,500
Capital stock 100,000
Retained earnings 24,100
Sales 220,000 239,000
Purchases 350,700 25,200
Shipments from home office 230,000
Operating expenses 42,800   31,000  
P 648,500 P 648,500 P 366,300 P 366,300

Additional information.
1. The mark-up on shipments has been constant at 25% above cost.
2. All cash collections made by the branch are deposited in a local bank to the account of the home office. Deposits
of this nature included the following:

Date deposited by Branch Date recorded by HO Amount

December 26, 2020 December 31, 2020 P 3,000
December 30, 2020 January 6, 2021 10,000
January 2, 2021 January 6, 2021 5,000

3. Expenses of P2,500 charged by the home office to the branch have not yet been taken up by the branch.
4. The inventories as of December 31, 2020 were:
Home Office P 15,000
Branch (excluding in transit) from Home
Office 6,000
From the suppliers 2,100

1. What is the combined net income (net loss) of the Home Office & Branch for 2020?
2. What is the correct balance of the Home Office Equity account as of December 31, 2020?
3. What is the combined total asset of the branch as of December 31, 2020?

The pre-closing general ledger trial balances at December 31, 2020 for Green Rose Company and its branch are shown
below:
Green Rose Company
Trial Balances
December 31, 2020
Debits

Cash 25,000.00 8,000.00

Accounts Receivable (net) 35,000.00 12,000.00

Inventories Jan 1 20,000.00
 70,000.00

Equipment (net) 90,000.00

Branch 20,000.00

Purchases 290,000.00 24,000.00

Shipments from Home Office 45,000.00

Operating Expenses 44,000.00 11,000.00

Credits

Accounts Payable 36,000.00 13,500.00

Accrued Expenses 14,000.00 2,500.00

Home Office 9,000.00

Capital Stock, P10 par 50,000.00

Retained Earnings 42,500.00

Sales 381,000.00 95,000.00

Shipment to Branch 40,000.00

Allowance for overvaluation of branch
inventory 10,500.00

Your audit disclosed the following information:

a. On December 23, 2020, the branch manager purchased P4,000 of equipment but failed to notify the home office.
The branch accountant, knowing that equipment is carried in the home office accounts, recorded the proper
journal entry in the branch accounting records. It is the company’s policy not to take any depreciation on
equipment acquired in the last half of the year.
b. On December 27, 2020, Jerome, a branch customer, erroneously paid his account of P2,000 to the home office
account but did not notify the branch.
c. On December 13, 2020 the branch remitted cash of P5,000 which was received by the home office in January 3,
2021.
d. On December 31, 2020, the branch erroneously recorded the December allocated expenses from the home office
as P500 instead of P1,500.
e. On December 28, 2020, the home office shipped merchandise billed at P3,000 to the branch, which was received
in January 6, 2020.
f. Home office 2020 shipments to the branch purchased by the home office in 2020. The physical inventories at
December 31, 2020, excluding the shipment in transit, are home office P55,000 (at cost); branch P20,000 which
includes P2,000 acquired from outside vendors. Both the home office and the branch use the periodic inventory
system.
g. The home office consistently bills shipments to the branch at 20% above cost.

4. What is the combined ending inventory as of December 31, 2020?

5. What is adjusted balance of the home office & branch account?
6. What is the true net income of the branch for 2020?
7. What portion of the beginning inventory was from the home office?

Oh Feel Young company is engaged in merchandising both at its Home Office in Makati and at its Branch in Korea.
Selected accounts taken from the trial balances of the home office and the branch as of December 31, 2020 follow:
Makati Korea
Debits
 Inventory Beg 23,000.00 11,550.00
Branch 58,300.00
Purchases 190,000.00 105,000.00
Freight In from Home Office 5,500.00
Operating Expenses 52,000.00 28,000.00
Credits
Home Office 53,300.00
Sales 155,000.00 140,000.00
Shipment to Branch 110,000.00
Allowance for Overvaluation at 1/1/2020 1,000.00
Additional information:
a. The Korea branch gets all of its merchandise from the home office. The home office bills the goods at cost plus a
10% mark-up. At December 31, 2020, a shipment with a billed value of P5,000 was still in transit. Freight on this
shipment was P250 and is to be treated as part of the inventory.
b. Inventories on December 31, 2020, excluding the shipment in transit, follow:
Home office at cost P30,000
Branch at billed price(excluding freight of P520) 10,400

8. What is the net income of the home office from its own operation for 2020?
9. What is the net income of the Korea Branch for 2020?
10. What is the balance of allowance for overvaluation at December 31, 2020?

The branch manager of Baste Company submitted a report on December 31, 2020 which contained among others the
following information:
Petty Cash Fund P1,500
Accounts Receivable 12/31/2019 43,800
Accounts Receivable 12/31/2020 49,140
Merchandise Inventory 12/31/2019 37,170
Sales 198,720
Allowance for Doubtful Account 3,600
Accounts Written off 5,520
Cost of Sales 131,800
Shipments from HO 136,000
Cash Expenses 54,330
Depreciation Expense (charged) 3,600

11. The investment in branch account as of December 31, 2020 is?

12. Assuming that all cash collected by the branch are remitted to the home office, the total remittance for 2020
would be?
13. The net income (loss) of the branch for 2020 would be?

The JPIA company of Cavite City opened a branch in Tanza on January 3, 2020 to expend the market of its product.
Merchandise shipped during 2020 to Tanza branch totaled P104,000 which included a profit of 20% based on billed price.
At year end, the inventory at billed price was P12,500. Other transactions affecting the branch are as follows: Sales on
account, P117,000, cash collections, P84,000 after allowing cash discounts of P1,480; Expenses P20,000 including unpaid
of P1,300, cash remittance to home office, P65,000.
14. The true net income of the branch after adjustment made by the H.O. was?

Louie Corporation operates branches in Cavite & Laguna. The following are some of the intercompany transactions for
the month of August.
a. Cavite made a fund transfer to Laguna per Home Office instruction P10,000
b. Cavite collected Laguna branch receivables of P8,500 less a 2% discount.
c. Laguna shipped merchandise costing P15,000 to Cavite.
d. Home Office shipped merchandise costing P20,000 to Laguna and paid freight of P300. Laguna paid additional
freight of P300.
e. Laguna reshipped one-half of the goods received in letter d to Cavite. Cavite paid for freight cost of P200. Normal
freight from Home Office is only P400.
f. Home office transferred machinery costing P3,000, to be depreciated at 10%. It is home office policy that fixed
assets be carried only in the home office books. The transfer was acknowledged by Laguna.
g. The machinery is to be depreciated at the end of the month.
h. Cavite reported a net loss in the amount of P9,500 while Laguna reported a net income of P32,750.

15. What is the balance of the Home Office Equity account in Cavite books?
16. What is the balance of the Home Office Equity account in Laguna books?