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Home Office and Branch Special Problems Ch9 Solman
Home Office and Branch Special Problems Ch9 Solman
SUGGESTED ANSWERS
EXERCISES
Exercise 9 - 1
Books of Branch R
Home Office 15,000
Cash 15,000
Books of Branch S
Cash 15,000
Home Office 15,000
Exercise 9 - 2
Books of Branch No. 1
Home Office 1,950
Shipments from Home Office 1,600
Freight-In 350
2. Branch 360,000
Shipments to Branch 240,000
Allowance for Markup in Branch Inventory 120,000
120,000/240,000 = 50%
3. no entry
4. Branch 134,000
Advertising Expense 40,000
Depreciation Expense 70,000
Utility Expense 24,000
AA1- Chapter 9 (2008 edition)
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5. no entry
Cash 360,000
Branch 360,000
6. no entry
7. Branch 58,000
Branch Income 58,000
Branch Books
1. Purchases 160,000
Accounts Payable 160,000
5. Cash 470,000
Accounts Receivable 470,000
Exercise 9 - 4
a. Merchandise inventory, beg. P150,000
Less Merchandise from home office at billed price
Markup on merchandise shipped to branch P 36,000
Markup on current shipment (P96,000 – P80,000) 16,000
Markup on beginning inventory P 20,000
x 120/20 120,000
Merchandise purchased from outsiders P 30,000
Exercise 9 – 5
Home Office Books
1. Branch 450,000
Shipments to Branch 300,000
Allowance for Markup in Branch Inventory 150,000
150,000/300,000 = 50%
2. no entry
Branch Books
1. Shipments from Home Office 450,000
Home Office 450,000
3. no entry
Exercise 9 – 6
1. Branch 820,000
Cash 80,000
Shipments to Branch 240,000
AA1- Chapter 9 (2008 edition)
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Land 300,000
Allowance for Markup in Branch Inventory 120,000
Allowance on Transfer of Land 80,000
120,000/240,000 = 50%
2. Branch 560,000
Shipments to Branch 400,000
Allowance for Markup in Branch Inventory 160,000
160,000/400,000 = 40%
3. Branch 130,000
Branch Income 130,000
Exercise 9 - 7
Required balance of allowance (markup on branch ending inventory)
P9,600 x 20/120 P 1,600
Adjustment for realized markup 36,400
Balance of allowance before adjustment P38,000
Allowance on current shipment (P160,000 x 20%) 32,000
Allowance on branch beginning inventory P 6,000
Markup rate ÷ 20%
Branch beginning inventory, at cost P30,000
Exercise 9 - 8
a. Merchandise available for sale at billed price (P16,200 + P20,250) P36,450
Merchandise available for sale at cost (P36,450/135%) 27,000
Unrealized intercompany inventory profit balance before adjustment P 9,450
Branch Books
Home Office 540
Shipments from Home Office 540
Exercise 9 – 9
1. P20,000 ÷ 25/125 = P100,000
Exercise 9 - 10
Separate cost of goods sold of the home office:
Inventory, beginning P 252,000
Purchases 2,800,000
Shipments to branch ( 600,000)
Cost of goods available for sale P2,452,000
Less Inventory, end 240,000 P2,212,000
Separate cost of goods sold of the branch:
Inventory, beginning
From outside purchases P 12,000
From home office (P36,000 / 120%) 30,000
Total P 42,000
Purchases 96,000
Shipments from home office (P720,000 / 120%) 600,000
Cost of goods available for sale P 738,000
Less Inventory, end:
From outside purchases P10,000
From home office (P42,000 / 120%) 35,000 45,000 693,000
Combined cost of goods sold P2,905,000
Exercise 9– 11
1. Total Resold On Hand
Shipments from home office P450,000 P360,000 P90,000
Shipments to branch 375,000 300,000* 75,000**
Markup P 75,000 P 60,000 P15,000
Exercise 9 - 12
a. Merchandise Inventory, January 1 P26,400
Add Shipments from Home Office 20,000
Cost of Goods Available for Sale P46,400
Cost of Goods Sold
Sales, net of Sales Returns (P15,000 - P2,000) P13,000
Sales rate 125% 10,400
Merchandise destroyed by fire at billed price P36,000
÷ 120%
Merchandise destroyed by fire at cost P30,000
b. Home Office Books
Branch Loss from Fire 30,000
Allowance for Markup in Branch Inventory 6,000
Branch 36,000
Branch Books
Home Office 36,000
Merchandise Inventory 36,000
Exercise 9 – 13
1. Branch Income 50,000
Cost of Goods Sold P230,000 x 15/115 30,000
Branch 20,000
PROBLEMS
Problem 9 – 1
Billed Price Cost Markup
Beginning inventory:
Acquired from vendors P100,000 P100,000 -
Acquired from home office 40,000 32,000 P 8,000
Purchases from vendors 240,000 240,000 -
Shipments from Home Office P180,000 + P30,000 210,000 168,000 42,000
Total inventory available for sale P590,000 P540,000 P50,000
Less Ending inventory:
Acquired from vendors 40,000 40,000 -
Acquired from home office P60,000 + P30,000 90,000 72,000 18,000
Cost of goods sold P460,000 P428,000 P32,000
AA1- Chapter 9 (2008 edition)
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Problem 9 – 2
Home Office Books
a. Dagupan Branch 10,000
Cash 10,000
d. Expenses 800
Dagupan Branch 800
c. no entry
e. no entry
AA1- Chapter 9 (2008 edition)
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h. Expenses 1,800
Home Office 1,800
c. no entry
d. no entry
e. Cash 29,400
Home Office 29,400
f. Cash 15,000
Home Office 15,000
g. no entry
i. no entry
Problem 9 – 3
Requirement 1
Home Office Books
1. Baguio Branch 20,000
Cash 20,000
AA1- Chapter 9 (2008 edition)
page 9
3. Cash 245,000
Baguio Branch 245,000
5 – 7 - no entry
4. Expenses 7,000
Home Office 7,000
5. Cash 247,400
Accounts Receivable 40,600
Sales 288,000
6. Expenses 21,000
Cash 21,000
Requirement 2
Baguio Branch 15,000
Branch Income 15,000
Requirement 3
Cash 2,000
Home Office 2,000
Problem 9 - 4
Requirement 1
Triple D Bookstore
Statement of Recognized Income and Expenses - Quezon City Branch
For the Year Ended December 31, 2008
Sales P192,690
Cost of Goods Sold:
Merchandise Inventory, beginning P 31,500
Shipments from Home Office 128,000
Cost of Goods Available for Sale P159,500
Less Merchandise Inventory, end 22,750 136,750
Gross Profit P 55,940
Operating Expenses:
Advertising and Promotion P 6,400
Depreciation 2,400
Uncollectible Accounts Expense 1,250
Others 36,600 46,680
Net income P 9,260
Requirement 2
Branch 9,260
Branch Income 9,260
Problem 9 - 5
Branch Books
a. Sales 78,000
Merchandise Inventory, end 12,000
Income Summary 10,000
Merchandise Inventory, beginning 10,000
Shipments from Home Office 80,000
Selling Expenses 4,000
Administrative Expenses 6,000
AA1- Chapter 9 (2008 edition)
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Problem 9 - 6
Requirement 1
Triple F Products Inc. - Branch
Trial Balance
December 31, 2008
Debit Credit
Cash 12,800
Accounts Receivable 48,160
Merchandise Inventory 27,280
Accounts Payable 2,040
Home Office 68,900
Sales 256,000
Cost of Sales 191,620
Operating Expenses 47,080 _______
326,940 326,940
AA1- Chapter 9 (2008 edition)
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Requirement 2
Home Office Books
a. Sales 640,600
Income Summary 41,360
Cost of Sales 452,840
Operating Expenses 146,400
b. Branch 17,300
Branch Income 17,300
Branch Books
a. Merchandise Inventory P202,400 – P189,200 13,200
Home Office 13,200
b. Sales 256,000
Income Summary 17,300
Cost of Sales 191,620
Operating Expenses 47,080
Problem 9 - 7
Triple G Company
Combined Statement of Recognized Income and Expenses
for Home Office and Branch
For the Year Ended December 31, 2008
Sales P325,000
Cost of goods sold:
Merchandise inventory, beginning P107,500
Purchases 215,000
Cost of goods available for sale P322,500
Less Merchandise inventory, end 81,300 241,200
Gross profit P 83,800
Operating expenses 50,000
Net income before Income Tax P 33,800
Income Tax 11,830
Net Income P 21,970
c. Sales 250,000
Shipments to Branch 30,000
Merchandise Inventory, end 55,000
Income Summary 15,000
Purchases 200,000
Expenses 40,000
Merchandise Inventory, beginning 80,000
Problem 9 – 8
Requirement 2
a. Plant Assets 4,000
Branch 4,000
c. Cash 5,000
Branch 5,000
d. Expenses 1,000
Home Office 1,000
h. Sales 48,000
Shipments from Home Office 48,000
AA1- Chapter 9 (2008 edition)
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Problem 9 – 8
Triple J Wholesale Company
Work Sheet for Combined Financial Statements
For the Year Ended December 31, 2008
Adjustments and
Trial Balance Eliminations Income Statement Balance Sheet
Debits Home Office Branch Debit Credit Debit Credit Debit Credit
Cash 36,000 8,000 (c ) 5,000 49,000
Accounts Receivable 35,000 12,000 (b) 2,000 45,000
Inventory 70,000 15,000 (f) 2,500 82,500 74,500 74,500
Plant Assets, net 90,000 (a) 4,000 94,000
Branch 20,000 (a) 4,000
(c ) 5,000
(g) 11,000
Purchases 290,000 24,000 314,000
Shipments from Home Office 45,000 (e) 3,000 (h) 48,000
Expenses 44,000 16,000 (d) 1,000 61,000
Income Tax (i) 36,400 36,400
585,000 120,000
Credits
Accounts Payable 36,000 13,500 49,500
Accrued Expenses 14,000 2,500 16,500
Income Tax Payable (i) 36,400 36,400
Home Office 9,000 (b) 2,000 (d) 1,000
(g) 11,000 (e) 3,000
Ordinary Share Capital 50,000 50,000
Retained Earnings 45,000 (f) 2,500 42,500
Problem 9 – 9
Triple M Company
Work Sheet for Combined Financial Statements
For the Year Ended December 31, 2008
Problem 9 – 10
Triple N Commercial
Working Paper for Combined Financial Statements for Home Office and Branch
For the Year Ended December 31, 2008
Debits HO Branch HO Branch HO Branch Debit Credit Debit Credit Debit Credit Debit Credit
Cash 50,100 1,260 a. 5,320 b. 2,100 55,420 3,360
58,780
Accounts Receivable (net) 350,000 135,660 c. ( 2,500) 350,000 133,160
483,160
Inventory – Home office 64,400 64,400 64,400
70,000
Branch 32,340 32,340 a.
2,940 29,400 32,200 102,200
Fixed Assets (net) 210,000 210,000
210,000
Branch Current 163,120 a. (5,320) 157,800 c.
157,800
Purchases 532,000 532,000 532,000
Shipments from Home 294,000 d. 14,000 308,000 b.
Office 28,000 280,000
Sundry Expenses 119,980 83,440 119,980 83,440 119,980
83,440
Income Tax f. 23,667 e. 10,976 23,667 10,976 10,976 23,667
Credits
Accounts Payable 30,500 10,500 30,500 10,500
41,000
Mortgage Payable 67,500 67,500
67,500
Income Tax Payable f. 23,667 e. 10,976 23,667 10,976
34,643
Home Office Current 144,200 b. 2,100
c. ( 2,500)
d. 14,000 157,800 c. 157,800
MULTIPLE CHOICE
1. B 3. C 5. D 7. D
2. B 4. D 6. B 8. D
9 A
10 C
11 C
12 D P13,200 + P350 = P13,550
13 C P11,000 + P350 = P11,350
17 C Sales P141,000
Cost of goods sold (P120,000 x 3/4 x 125%) 112.500
Gross profit P 28,500
Operating expenses 27,000
Net income reported by the branch P 1,500
18 A P50,400/120% P42,000
27 B Sales P 292,500
Cost of goods sold (P180,000 + P45,000 - P60,000) (165,000)
Operating expenses ( 72,000)
Realized markup [(P180,000 x 20/120) - P7,500 22,500
True net income of the branch P 78,000
29 D Sales P540,000
Cost of goods sold
(P54,600 + P390,000 + P144,600 - P48,750) (540,450)
Operating expenses ( 51,000)
Realized markup [P99,900 - (P39,000 x 30/130)] 90,900
True net income of the branch P 39,450
33 C Sales P 37,400
Cost of goods sold (P5,000 + P2,000 + P26,400 – P4,500) ( 28,900)
Operating expenses ( 3,000)
Realized markup [P2,800 – (P3,960 x 10/110)] 2,440
True profit of Cebu branch P 7,940
34 D Sales P110,000
Cost of goods sold
(P16,000 + P80,000 – P24,000 – P20,000) ( 52,000)
Operating expenses ( 10,000)
Net income of the home office P 48,000
Net income of the branch 7,940
Combined net income of the home office and branch P 55,940
35 C Sales P155,000
Cost of sales:
Inventory, beginning P 23,000
Purchases 190,000
Goods available for sale P213,000
Shipments to branch (P110,000/110%) 100,000
Goods available for own sale P113,000
Less Inventory, end 30,000 83,000
Gross profit P 72,000
Expenses 52,000
Net income P 20,000
36 A Sales P140,000
Cost of sales:
Inventory, beginning (P11,550 – P1,000) P 10,550
Shipments from HO, including freight-in 105,750
Goods available for sale P116,300
Less Inventory, end
[(P10,400 + P5,000)/110%] + P520 + P250 14,770 101,530
Gross profit P 38,470
Expenses 28,400
True branch net income P 10,470
39 C Sales P400,000
Cost of goods sold (P37,500 + P250,000 - P40,000) (247,500)
Operating expenses (100,000)
Net income reported by branch P 52,500
47 D Sales P 600,000
Cost of goods sold (P75,000 + P444,000 - P84,000) (435,000)
Operating expenses (200,000)
Realized markup [P72,500 - (P84,000 x 20/120)] 58,500
Adjusted profit of the branch P 23,500
Problem 9 – 8
Triple J Wholesale Company
Work Sheet for Combined Financial Statements
Adjustments and
Trial Balance Eliminations Income Statement Balance Sheet
Debits Home Office Branch Debit Credit Debit Credit Debit Credit
Cash 36,000 8,000 (c ) 5,000 49,000
Accounts Receivable 35,000 12,000 (b) 2,000 45,000
Inventory 70,000 15,000 (f) 2,500 82,500 74,500 74,500
Plant Assets, net 90,000 (a) 4,000 94,000
Branch 20,000 (a) 4,000
(c ) 5,000
(g) 11,000
Purchases 290,000 24,000 314,000
Shipments from Home Office 45,000 (e) 3,000 (h) 48,000
Expenses 44,000 16,000 (d) 1,000 61,000
Income Tax (i) 36,400 36,400
585,000 120,000
Credits
Accounts Payable 36,000 13,500 49,500
Accrued Expenses 14,000 2,500 16,500
Income Tax Payable (i) 36,400 36,400
Home Office 9,000 (b) 2,000 (d) 1,000
(g) 11,000 (e) 3,000
Ordinary Share Capital 50,000 50,000
Retained Earnings 45,000 (f) 2,500 42,500
Problem 9 – 9
Triple M Company
Work Sheet for Combined Financial Statements
For the Year Ended December 31, 2008