Advanced accounting by baysa lupisan chapter 08

CHAPTER 8
SUGGESTED ANSWERS
EXERCISES
Exercise 8 - 1
(a)
(b)
(c)
(d)
(e)
(f)

Working Fund - Agency
Cash

5,000
5,000

Accounts Receivable - Agency
Sales - Agency

50,000

Cash
Accounts Receivable - Agency

35,000

50,000
35,000

Expenses - Agency

Cash

4,500

Expenses - Agency
Cash

2,250

Cost of Sales - Agency
Shipments to Agency

4,500
2,250
36,000
36,000

Exercise 8- 2
(a)

(b)
(c)
(d)

(e)

(f)
(g)

Working Fund - Makati Agency

Samples - Makati Agency
Cash
Shipments to Makati Agency

10,000
60,000
10,000
60,000

Accounts Receivable - Makati Agency
Sales - Makati Agency

200,000

Cost of Sales - Makati Agency
Shipments to Makati Agency

116,000

200,000
116,000

Salaries and Commission - Makati Agency
Furniture and Fixtures - Makati Agency
Cash

20,000
45,000

Delivery Expense - Makati Agency

Office Supplies Expense - Makati Agency
Cash

6,200
1,000

Samples Expense - Makati Agency
Samples - Makati Agency
Office Supplies - Makati Agency
Office Supplies Expense

65,000

7,200
25,000
25,000
300
300


AA1- Chapter 8 (2008 edition)

(h)
(I)

(j)

page 2

Depreciation Expense - Makati Agency

Accumulated Depr. - Furniture & Fixtures
Sales - Makati Agency
Agency Income
Cost of Sales - Makati Agency
Salaries and Commission - Makati Agency
Delivery Expense - Makati Agency
Samples Expense - Makati Agency
Office Supplies Expense - Makati Agency
Depreciation Expense - Makati Agency
Agency Income
Income Summary

1,250
1,250
200,000
30,850
116,000
20,000
6,200
25,000
700
1,250
30,850
30,850

Exercise 8-3
Home Office Books
(a)
(b)
(c)

(d)
(e)
(f)
(g)
(h)

Cash
Iloilo Branch

20,000
20,000

Iloilo Branch
Cash

3,500

Expenses
Iloilo Branch

1,200

3,500
1,200

Iloilo Branch
Shipments to Iloilo Branch

32,000

Shipments to Iloilo Branch
Iloilo Branch

15,000

32,000
15,000

Furniture and Fixtures
Cash

5,500
5,500

Iloilo Branch
Accumulated Depr. - Furniture & Fixtures
Branch Income
Branch

550
550
2,600
2,600

Branch Office Books
(a)

Home Office

20,000

AA1- Chapter 8 (2008 edition)

page 3

Cash
(b)
(c)
(d)
(e)

Expenses
Home office

3,500

Home Office
Cash

1,200

3,500
1,200

Shipments from Home Office
Home Office

32,000

Home Office
Shipments from Home Office

15,000

(f)

Memo entry

(g)

Depreciation Expense
Home Office

(h)

20,000

32,000
15,000

550
550

Home Office
Income Summary

2,600
2,600

Exercise 8-4
Home Office Books
(a)
(1)
(5)

Dagupan Branch
Shipments to Branch

300,000

Cash
Dagupan Branch

150,000

300,000
150,000
Branch Office Books

(1)
(2)
(3)

(4)

(5)

Shipments from Home Office
Home Office

300,000

Accounts Receivable
Sales

390,000

Expenses
Cash
Accrued Expenses

74,000

300,000
390,000
72,000
2,000

Cash
Sales Discount
Accounts Receivable

288,000
6,000

Home Office
Cash

150,000

294,000
150,000


AA1- Chapter 8 (2008 edition)

(6)
(7)

page 4

Furniture and Fixtures
Cash

40,000
40,000

Expenses
Accumulated Depr. - Furniture & Fixtures

8,000
8,000

(b)
Merchandise Inventory
Sales
Shipments from Home Office
Expenses
Sales Discounts

Income Summary

60,000
390,000
300,000
82,000
6,000
62,000

Income Summary
Home Office

62,000
62,000

(c)
Honda Sales, Inc.
Statement of Recognized Income and Expenses - Branch
For the Year Ended December 31,2008
Sales
Less: Sales Discount
Cost of sales:
Shipment to Home Office
Less: Inventory, end
240,000
Gross Profit
Expenses
82,000
Net Profit
(d)

P 390,000
6,000

P384,000

P 300,000
60,000
P 144,000
P 62,000
Honda Sales, Inc.
Statement of Financial Position - Branch
December 31,2008
Assets

Cash (-720,00 + 288,000 - 150,000 - 40,000)
Accounts Receivable (390,000 – 294,000)
Merchandise Inventory
Furniture and Fixture
Less: Accumulated Depreciation
Total Assets

P 26,000
96,000
60,000
P

40,000
8,000

32,000
P 214,000

Liabilities
Accrued Expenses
Home Office (300,000 - 150,000 + 62,000)
Total Liabilities

P

2,000
212,000
P 214,000


AA1- Chapter 8 (2008 edition)

page 5

Exercise 8- 5
Home Office Books
(a)
(b)
(c)
(d)

(a)
(b)
(c)
(d)

Furniture and Fixtures
Branch

24,500

Branch
Cash

24,500

24,500
24,500

Branch
Accumulated Depr. - Furniture & Fixtures
Furniture & Fixtures - new
Accumulated Depr. - Furniture & Fixtures
Branch Income
Furniture & Fixtures - old
Cash
Branch Office Books

2,450
2,450
40,000
2,450
7,050
24,500
25,000

Home Office
Accounts Payable

24,500

Accounts Payable
Home Office

24,500

Depreciation Expense
Home Office

24,500
24,500
2,450
2,450

Memo entry

Exercise 8-6
Jan.

10
10
16

16
20

25

Notes Payable
Home Office
Furniture and Fixtures
Home Office

2,500
2,500
10,000
10,000

Shipments from Home Office
Home Office

6,500

Home Office
Cash

2,000

Home Office
Shipments from Home Office

1,200

Home Office
Accounts Receivable

6,500

2,000
1,200
150
150


AA1- Chapter 8 (2008 edition)

30
31

page 6

Expenses
Home office

800

Home Office
Income Summary

750

800
750

Exercise 8 -7
Honda Company

Reconciliation of Home Office and Branch Accounts
December 31,2008
HO Books
Unadjusted balances
Adjustments;
(a) Merchandise in transit
(b) Collection of home office accounts rec’l
(c) Error in recording the net income of branch
(P1,215 - P1,125)
(d) Merchandise returned by branch still in
transit
Adjusted balances

Branch
Books
HO Acct.
P 9,735

Branch Acct.
P 8,400

615
2,500
90
( 640)
P 10,350

_______
P 10,350

Requirement 2
Home Office Books
(b)
(c)
(d)

Branch
Accounts Receivable

2,500
2,500

Branch
Branch Income

90
90

Shipments to Branch
Branch

640
640
Branch Books

(a)

Shipments from Home Office
Home Office
Exercise 8-8

615
615
Home Office Books

(a)
(b)
(c)

Allowance for Doubtful Accounts
Makati Branch

600
600

Makati Branch
General and Administrative Expense

1,250

Manila Branch
Makati Branch

1,200

1,250
1,200


AA1- Chapter 8 (2008 edition)

(d)

page 7

Makati Branch
Allowance for Uncollectible Accounts

850
850

Branch Books
(a)
(b)

Home Office
Accounts Receivable

600
600

General and Administrative Expenses
Home Office

(c)

No entry

(d)

Uncollectible Accounts Expense
Home office

1,250
1,250

850
850

PROBLEMS
Problem 8-1
(a)

(b)
(c)

(d)

(e)

(f)

(g)

Samples - Cebu Agency
Advertising Materials - Cebu Agency
Shipments to Cebu Agency
Advertising Materials

60,000

35,000

Working Fund - Cebu Agency
Cash

30,000

60,000
35,000
30,000

Accounts Receivable - Cebu Agency
Sales - Cebu Agency

330,000

Cost of Sales - Cebu Agency
Shipments to Cebu Agency

250,000

Cash
Sales Discounts - Cebu Agency
Accounts Receivable - Cebu Agency

245,000
5,000

330,000
250,000

250,000

Rent Expense - Cebu Agency
Delivery Expense - Cebu Agency
Repairs and Maintenance - Cebu Agency
Cash

15,000
3,000
2,200

Salaries and Wages - Cebu Agency
Commission Expense - Cebu Agency
Salaries and Wages
Commission Expense

10,200
33,000

Samples Expense - Cebu Agency

15,000

20,200

10,200
33,000

AA1- Chapter 8 (2008 edition)

page 8

Samples - Cebu Agency
(g)
(h)

(I)

15,000

Advertising Materials Expense - Cebu Agency
Advertising Materials - Cebu Agency
Sales - Cebu Agency
Agency Income
Cost of Sales - Cebu Agency
Sales Discounts - Cebu Agency
Rent Expense - Cebu Agency
Delivery Expense - Cebu Agency
Repairs and Maintenance - Cebu Agency
Salaries and Wages - Cebu Agency
Commission Expense - Cebu Agency
Samples Expense - Cebu Agency
Advertising Materials Expense - Cebu Agency
Income Summary
Agency Income

10,500
10,500

330,000
13,900
250,000
5,000
15,000
3,000
2,200
10,200
33,000
15,000
10,500
13,900
13,900

Problem 8- 2
Home Office Books
(a)
(b)

Branch
Cash

No entry

(d)

Branch
Cash
Equipment
Gain on Transfer of Equipment

No entry

(f)

150,000

Branch
Shipments to Branch

(c)

(e)

150,000
90,000
90,000

90,000
3,000
75,000
12,000

Expenses
Cash

(g)

and (h) no entry

(I)

Cash
Branch

7,500
7,500

52,500
52,500
Branch Books

(a)
(b)

Cash
Home Office
Shipments from Home Office

150,000
150,000
90,000


AA1- Chapter 8 (2008 edition)

page 9

Home Office
(c)
(d)

(e)

Purchases
Cash
Equipment
Home Office

120,000
90,000
90,000
250,000

Cash
Accounts Receivable

100,000

No entry

(g)

Depreciation Expense - Equipment
Accumulated Depr. - Equipment

(I)

120,000

Accounts Receivable
Sales

(f)

(h)

90,000

250,000
100,000

9,000
9,000

Selling and Administrative Expenses
Cash

45,000

Home Office
Cash

52,500

45,000
52,500

Problem 8-3
Requirement 1
a.
b.

c.
d.
e.
f.
g.
h.

Accounts Receivable
Sales

80,000

Purchases
Accounts Payable

21,000

Shipments from Home Office
Home office

40,000

Cash
Accounts Receivable

76,000

Accounts Payable
Cash

20,200

Allowance for Uncollectible Accounts
Accounts Receivable

80,000
21,000
40,000
76,000
20,200
1,200
1,200

Home Office
Cash

30,000

Expenses

24,800

30,000


AA1- Chapter 8 (2008 edition)

page 10

Cash

I.
j.

k.

l.

24,800

Expenses
Home Office

1,600

Prepaid Expenses
Accrued Expenses
Expenses
Allowance for Doubtful Accounts
Accumulated Depreciation

200
400
1,700

1,600

1,100
1,200

Merchandise Inventory, end

Sales
Income Summary
Merchandise Inventory, beg.
Shipments from Home Office
Purchases
Expenses

38,800
80,000
3,300
33,000
40,000
21,000
28,100

Home Office
Income Summary

3,300
3,300

Requirement 2
Volvo Company
Statement of Recognized Income and Expenses - Branch
For the Year Ended December 31, 2008
Sales
Cost of goods sold:
Inventory, January 1
Purchases
Shipments from home office

Cost of goods available for sale
Less Inventory, December 31
Gross profit
Operating expenses
Net loss

P80,000
P33,000
21,000
40,000
P94,000
38,800

Volvo Company
Statement of Financial Position - Branch
December 31, 2008
Assets

55,200
P24,800
28,100
P 3,300


AA1- Chapter 8 (2008 edition)

page 11

Cash (7,000 + 76,000 + 20,200 - 30,000 - 24,800)
Accounts Receivable (24,400 + 80,000 - 76,000 -1,200)

Less Allowance for Uncollectible Accounts
Merchandise Inventory
Prepaid Expenses
Furniture and Fixtures
Less Accumulated Depreciation
Total Assets
Liabilities

P 8,000
P27,200
1,600
P 7,700
6,600

Accounts Payable (4,000 + 21,000 - 20,200)
Accrued Expenses
Home Office (60,500 + 40,000 - 30,000 + 1,600 - 3,300)
Total Liabilities

25,600
38,800
900
1,100
P74,400
P 4,800
800
68,800
P74,400

Volvo Company

Statement of Changes in Home Office Account
For the Year Ended December 31, 2008
Home office account balance, January 1
Add:
Shipments from home office
Expenses paid by home office
Total
Deduct:
Remittance to home office
Net loss
Home office account balance, December 31
Requirement 3
c.
g.
i.

P 60,500
P 40,000
1,600
P 30,000
3,300

Davao Branch
Shipments to Branch

40,000

Cash
Davao Branch

30,000

41,600
P102,100
33,300
P 68,800

40,000
30,000

Davao Branch
Cash

1,600
1,600

Branch Income
Davao Branch

3,300
3,300

Problem 8-4
Requirement 1
Branch Books
a.

Cash
Shipments from Home Office
Accounts Receivable

Home Office

15,000
102,000
26,000
143,000


AA1- Chapter 8 (2008 edition)

page 12

Home Office
Cash
b.
c.
d.
e.
f.
g.

h.
I.

9,000
9,000

Accounts Receivable
Sales

62,000

Cash
Accounts Receivable

26,000

Purchases
Accounts Payable

30,000

Accounts Payable
Cash

14,500

Expenses
Cash

12,500

Cash
Home Office
Accounts Receivable

16,000
1,500

Shipments from Home Office

Home Office

12,500

Home Office
Cash

10,000

62,000
26,000
30,000
14,500
12,500

17,500
12,500
10,000
Home Office Books

a.

Bacolod Branch
Cash
Shipments to Branch
Accounts Receivable
Store Furniture and Fixtures
Bacolod Branch

b.

c.
d.
e.

143,000
15,000
102,000
26,000
9,000
9,000

Accounts Receivable
Sales

346,000

Cash
Accounts Receivable

400,000

Purchases
Accounts Payable

316,000

Accounts Payable
Cash

362,000

346,000
400,000
316,000
362,000


AA1- Chapter 8 (2008 edition)

f.

g.
h.
I.

page 13

Expenses
Accrued Expenses
Cash

89,500
2,500
92,000

Allowance for Uncollectible Accounts
Bacolod Branch

1,500
1,500

Bacolod Branch
Shipments to Branch

12,500

Cash
Bacolod Branch

10,000

12,500
10,000

Requirement 2
Jazz Company
Statement of Recognized Income and Expenses - Bacolod Branch
For the Month Ended January 31, 2008
Sales
Cost of goods Sold:
Shipments from Home Office (102,000 + 12,500 + 6,000)
Purchases
Cost of Goods Available for Sale
Less Merchandise Inventory, December 31 (9,800 + 600)
Gross Profit
Expenses (12,500 + 4,750 + 350+ 3,500)
Net Loss

P 62,000
P120,500

30,000
P150,500
104,000

46,500
P 15,500
21,100
P 5,600

Jazz Company
Statement of Financial Position - Bacolod Branch
January 31, 2008
Assets
Cash (15,000 - 9,000 + 26,000 - 14,500 - 12,500 + 16,000 - 10,000)
Accounts Receivable (62,000 + 26,000 - 26,000 – 17,500)
Merchandise Inventory (98,000 + 6,000)
Total Assets
Liabilities
Accounts Payable (30,000 - 14,500)
Accrued Expenses
Home Office (143,000-9,000-1,500+12,500-10,000+6,000+4,750+350 -5,600)

P 11,000
44,500
104,000
P159,500
P 15,500
3,500
140,500

AA1- Chapter 8 (2008 edition)

page 14

Total Liabilities

P159,500
Jazz Company
Statement of Recognized Income and Expenses - Home Office
For the Month Ended January 31, 2008

Sales
Cost of Goods Sold:
Merchandise Inventory, January 1
Purchases
Cost of Goods Available for Sale
Less Shipments to Branch (102,000 + 12,500 + 6,000)
Cost of Goods Available for Own Sale
Less Merchandise Inventory, December 31
Gross Profit
Expenses (89,500 - 4,750 + 1,000 + 7,500)
Net Income from Own Operations
Less Branch Net Loss
Net profit
Income Tax
Net Profit

P346,000
P460,000

316,000
P776,000
120,500
P655,500
445,000

210,500
P135,500
93,250
P 42,250
5,600
P 36,650
12,828
P23,822

Jazz Company
Statement of Financial Position - Home Office
January 31, 2008
Assets
Cash (150,000 - 15,000 + 400,000 – 362,000 - 92,000 + 10,000)
Accounts Receivable (420,000 - 26,000 + 346,000 - 400,000)
Less Allowance for Uncollectible Accounts (12,000 - 1,500)
Merchandise Inventory
Branch (143,000 - 9,000 - 1,500 + 12,500 - 10,000
+ 6,000 + 4,750+ 350 - 5,600)
Store Furniture and Fixtures (150,000 + 9,000)
Less Accumulated Depreciation (46,000 + 1,350)
Total Assets

P 91,000

P340,000
10,500

329,500
445,000
140,500

P159,000
47,350

111,650
P1,117,650

Liabilities and Shareholders’ Equity
Accounts Payable (337,500 + 316,000 - 362,000)
Accrued Expenses
Income Tax Payable
Ordinary Share Capital (282,000 + 36,650)
Retained Earnings (282,000 + 23,822
Total Liabilities and Shareholders’ Equity

P 291,500
7,500
12,828
500,000
305,822
P1,117,650

Requirement 3
Jazz Company

Combined Statement of Recognized Income and Expenses for Home Office and Branch
For the Month Ended January 31, 2008


AA1- Chapter 8 (2008 edition)

page 15

Sales
Cost of Goods Sold:
Merchandise Inventory, January 1
Purchases
Cost of Goods Available for Sale
Less Merchandise Inventory, December 31
Gross Profit
Expenses
Net Profit
Income Tax
Net profit

P408,000
P460,000
346,000
P806,000
549,000

257,000
P151,000
114,350
P 36,650

12,828
P 23,822

Jazz Company
Combined Statement of Financial Position for Home Office and Branch
January 31, 2008
Assets
Cash
Accounts Receivable
Less Allowance for Uncollectible Accounts
Merchandise Inventory
Store Furniture and Fixtures
Less Accumulated Depreciation
Total Assets

P 102,000
P384,500
10,500
P159,000
47,350

374,000
549,000
111,650
P1,136,650

Liabilities and Shareholders’ Equity
Accounts Payable
Accrued Expenses
Income Tax Payable

Ordinary Share Capital
Retained Earnings
Total Liabilities and Shareholders’ Equity

P 307,000
11,000
12,828
500,000
305,822
P1,136,650

Requirement 4
Branch Books
a.
b.

Shipments from Home Office
Home Office

6,000

Expenses
Home Office

4,750

6,000
4,750

AA1- Chapter 8 (2008 edition)

c.

d.
e.

page 16

Expenses
Home Office
P22,500 + P9,000 = P31,500/7.5 yrs x 1/12
Expenses
Accrued Expenses

350
350
3,500
3,500

Sales
Merchandise Inventory, end
Income Summary
Shipments from Home Office

62,000
104,000
5,600
120,500
30,000

21,100

Purchases
Expenses
f.

Home Office
Income Summary

5,600
5,600
Home Office Books

a.
b.
c.

d.
e.
f.

Bacolod Branch
Shipments to Branch

6,000

Bacolod Branch
Expenses

4,750

Expenses
Bacolod Branch
Accumulated Depreciation
( 150,000 - 30,000 = 120,000 x 10% x 1/12 = 1,000 )
Expenses
Accrued Expenses

1,000
350

Branch Income
Bacolod Branch

5,600

Sales
Shipments to Branch
Merchandise Inventory, end
Income Summary
Merchandise Inventory, beg.
Purchases
Expenses
Branch Income

6,000
4,750

1,350
7,500

7,500
5,600
346,000
120,500
445,000
36,650
460,000
316,000
93,250
5,600

Income Tax
Income Tax Payable

12,828

Income Summary
Income Tax

12,828

12,828
12,828


AA1- Chapter 8 (2008 edition)

g.

page 17

Income Summary
Retained Earnings

23,822
23,822

Problem 8-5
Requirement 1
Feroza Company
Working Paper for Combined Financial Statement
For the Year Ended December 31,2008

Debits
Cash
NR
AR
Inventories
F&E
Branch
Cur.
CGS
OE
Credits
AP
CS
HO Cur.
RE
Sales

HO
63,000
10,500
120,600
143,700
72,150
124,050
300,750
104,250
939,000

BR
21,900

Adjustments
Eliminations
Dr.
Cr.

Combined Income
Statement
Dr.
Cr.

55,950
36,300

Combined Balance
Sheet
Dr.

Cr.
84,900
10,500
176,550
180,000
72,150

a.124,050
128,700
32,850
275,700

429,450
137,100

61,500
300,000

61,500
300,000
124,050

37,500
540,000
939,000

Net Profit

a.124,050
37,500

151,650
275,700

124,050

124,050

566,550
125,100
691,650

691,650
691,650
691,650

524,100

Requirement 2
a.

Sales
Income Summary
Cost of Goods Sold
Operating Expenses

151,650
9,900
128,700
32,850

125,100
524,100


AA1- Chapter 8 (2008 edition)

b.

page 18

Home Office
Income Summary

9,900
9,900

Requirement 3
a.
b.

Branch Income
Branch

9,900

Income Summary
Branch Income

9,900

9,900
9,900

Problem 8-6
Requirement 1
Isuzu Company
Reconciliation of Home Office and Branch Accounts
January 31, 2008

Unadjusted balances
Add (deduct);
Advertising expense charged to branch
Merchandise shipment in transit
Merchandise shipment for P16,560 recorded
as P16,650
Collection of home office account
Understatement of 1994 depreciation
Remittance to home office in transit
Adjusted balances

Home Office
Books
Branch Acct.
P77,150

Branch Books
Home Office Acct.
P56,450
600

4,400
(

750
( 540)
(16,000)
P61,360

90)

_______
P61,360

Requirement 2
Home Office Books
a.

Cash
Retained Earnings
Accounts Receivable
Iloilo Branch

16,000
540
750
15,790
Branch Books

a.

Advertising Expense
Shipments from Home Office
Home Office

600
4,310
4,910


AA1- Chapter 8 (2008 edition)

page 19

Problem 8-7
Requirement 1
a.

b.

c.

Shipments from Home Office
Operating Expenses
Home Office Current

57,600
8,100
65,700

Sales

Merchandise Inventory, end
Income Summary
Merchandise Inventory, beg.
Shipments from Home Office
Operating Expenses

778,200
122,180

Income Summary
Home Office Current

116,990

116,990
47,800
680,800
54,790
116,990

Requirement 2
a.
b.
c.

Freight-Out
Branch Current

470

Cash
Branch Current

19,200

Branch Current
Branch Income

116,990

470
19,200
116,990

Requirement 3
Ford Company
Reconciliation of Current Account
December 31,2008

Balances before adjustment
Shipment in transit
Advertising charged to branch
Rent charged to branch
Error in charging freight
Remittance in transit

Branch
Home Office
Acct.
Acct.

P 206,344 P120,974
57,600
4,200
3,900
(470)
(19,200)
P 186,674
P 186,674


AA1- Chapter 8 (2008 edition)

page 20

Problem 8-8
Mitsubishi Trading Company
Reconciliation of Home Office and Branch Accounts
December 31, 2008
Unadjusted balances
Add (deduct):
Error in recording cost of equipment
Insurance premium recorded twice by branch
Freight for P1,125 recorded as P1,215
Discount from home office not recorded
Share of branch in advertising not recorded
Error in recording remittance
Adjusted balances

Branch Acct.
P225,770

Home Office Acct.
P220,485
3,150
675)
90)
800)
700
________
P222,770
(
(
(

(

3,000)
P222,770

Requirement 3
a.

Office Equipment
Advertising Expense
Insurance Expense
Freight
Discount from Home Office
Home Office

3,150

700
675
90
800
2,285
MULTIPLE CHOICE

1.

B

2.

A

3.

A

Sales
Cost of sales ( 400,0000 - 70,000)
Gross profit
Expenses [30,000 + 10,000 + (10,000 - 6,000) + 5,000]
Net profit

4.

A

Sales

Cost of sales w/o freight
Add freight
Cost of sales w/ freight

P400,000
330,000
70,000
49,000
P 21,000
P46,500
x 70%
P32,550
1,100
P33,650


AA1- Chapter 8 (2008 edition)

5.

Sales
Less Sales Discount (39,690 / 98%) - 39,690
Cost of sales
Gross Profit
Expenses:
Selling
Administrative (46,500 x 5%)
Samples Expenses
Net Profit

6.

page 21

P46,500
810

P 2,820
2,325
1,900

P45,690
33,650
P12,040

7,045
P 4,995

17,500 + 8,000 +9,250 + (50,000 x 60% x 1/6)

7.

C

Sales
Cost of sales
Gross Profit
Expenses
Net Income

8.
9.

D
B

P 87,00 / 125% =
Sales
Cost of sales
Gross Profit
Expenses (350 + 250)
Net Income

P70,000
P 87,500
70,000
P 17,500
6,000
P 11,500

10

A

11

C

12

B

13

A

Sales
Cost of sales
Shipments
Less Inventory, end
Gross Profit
Expenses
Net Profit

P74,000

14
15

A
A

P17,500 + 8,680

16

D

203,500 – (186,120 – 25,245 – 18,755) = 23,870

17

D

Home Office Current
Branch Income
Correct branch account - current

P176,000
105,000
P 71,000
39,750
P 31,250

P67,680
9,180

58,500
P15,500
6,820
P 8,680
P 26,180

P 48,125
23,870
P 71,995


AA1- Chapter 8 (2008 edition)

18

B

Sales
Cost of Sales:
Shipments from home office
Less Inventory, Dec. 31
Gross profit
Expenses
Net Profit

19

C

P90,000 + P14,400

20

A

P1,500 + 43,800 + 37,170

21

D

Net Sales (198,720 - 3,600)
Cost of sales

Beg. Inventory
Shipments
Goods available for sale
End. Inventory
Gross Profit
Expenses (57,930 + 1,920)
Net Profit

22

C
Balances before adjustment
Adjustments:
1. Shipments in transit
2. HO AR collected by branch
3. Supplies returned
4. Error in recording Br. net income
5. Cash to Branch in transit

23

D

24

C
Balances
Error in recording allowance
Advances taken by Pres.
Share in advertising expense

page 22

P112,500
P120,000
30,000

90,000
P 22,500
8,100
P 14,400
P104,400
P 82,470
P 195,120

P 37,170
136,000
P 173,170
41,370

131,800
P 63,320
59,850
P 3,470

BR. Acct.
HO Acct.
P150,000
P117,420
37,500

10,500
(4,500)
(1,080)
25,000
25,000
P179,920
P 179,920
P 179,920
BR Acct.
P43,500

HO. Acct.
P41,900
60

(550)
900
P42,950

P42,950
25

26

A

C

Sales
Cost of sales

Inventory, beg.
Merchandise from Home Office
Merchandise available for sale
Less Inventory, end
Gross profit
Operating Expenses
Net profit of Branch A

P 100,000
P21,000
61,000
P82,000
19,000

Branch A

63,000
P37,000
21,000
P16,000

Branch B


AA1- Chapter 8 (2008 edition)

page 23

Imprest branch fund
Accounts Receivable, Jan.1

Inventory, Jan.1
Home Office account

P

2,000
55,000
21,000
P 78,000

P 1,500
43,500
19,000
P 64,000

27

B

28

C

Imprest branch fund
Accounts Receivable, Dec. 31
Inventory, Dec. 31
Balance of Branch account - current

P 1,500
53,000

12,000
P 67,000

29

D

Sales
Cost of sales
Inventory, Jan.1
Merchandise from Home office
Merchandise available for sale
Less Inventory, Dec.31
Gross profit
Operating Expenses
Net profit of Branch B

P 80,000

30

P 19,000
47,000
P 66,000
12,000

D

HO Account.
Beg. Balances

1. Branch remittances
2. Shipment to branch
3. Home office expense paid by branch
4. Branch receivable collected by branch

P

30,670
(55,000)
138,000
(5,700)

P 107,970
31

D

Branch Acct.
P 133,970
(7,200)

Unadjusted balances
1. Remittance in transit
2. Shipment in transit
3. Home office expense paid by branch
4. Branch receivable collected by branch
5. Branch net profit

54,000
P 26,000

14,300
P 11,700
Branch
Acct.
P 30,670
(47,800)
160,000
(8,900)
P 133,970
HO Acct.
P 107,970
22,000

(5,700)
6,500
P 127,570

(8,900)
6,500
P 127,570

32

A

Marketing Expense of another branch charged to Butuan
Butuan’s remittance credited to Davao
Net adjustment in Home Office Banch account

P (10,000)

( 65,700)
P (75,700)

33

C

Fixed account not recorded by Butuan
Inventory transfer recorded twice by Butuan
Error in recording debit memo
Net adjustment in Branch Books

P (53,960)
75,000
(
90)
P 20,950

4,650


AA1- Chapter 8 (2008 edition)

34

page 24

D.
Branch Account

35

B.

Unadjusted balances

P165,920

Home Office
Account
P111,170

Net adjustment in Branch Account
Adjusted balances

(75,700)
P 90,220

(20,950)
P 90,220