Home-Office-Quizzer-PCU-Manila Accounting for intercompany transaction and transition PDF

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Summary

Philippine Overseas Corporation has operated a branch in Jordan for one year. Shipments are billed to the branch at cost. The branch carries its own accounts receivable, makes its own collections, and pays its own expenses. The transactions for the year are given effect to in the trial balance below...

Description

Philippine Overseas Corporation has operated a branch in Jordan for one year. Shipments are billed to the branch at cost. The branch carries its own accounts receivable, makes its own collections, and pays its own expenses. The transactions for the year are given effect to in the trial balance below: Debit Credit Accounts P 4,200 Cash . . . . . . . . . . . . . . . . . . . . . P 17,500 Home Office Current . . . . . . . . . . . . . 67,680 Shipments from Home Office . . . . . . . . . . 12,800 Accounts receivable . . . . . . . . . . . . . 6,820 Expenses . . . . . . . . . . . . . . . . . . . _74,000 P 91,500 Sales . . . . . . . . . . . . . . . . . . . . P 91,500 The branch reported an inventory on December 31, 20x5 of P9,180. Determine: 1. The net profit of the Jordan Branch for 20x5 was: a. P 8,680 c. P67,180 b. P 9,180 d. Some other answer. 2.

On January 1, 20x6, the Branch current account in the Home Office books should have a balance of: a. P26,180 c. P67,680 b. P26,680 d. Some other answer.

8.

On January 1, 20x6, the Shipments to Branch account in the Home Office books should have an opening balance of: a. Zero c. P26,180 b. P17,500 d. Some other answer.

IV On December 31, 20x4, the branch manager of Beta Company in the Ilocos region submitted the following data to the home office in Manila. Petty cash fund . . . . . . . . . . . . . . . . . . . P 3,000 Sales . . . . . . . . . . . . . . . . . . . . . . . . 195,000 Shipments from home office . . . . . . . . . . . . . 135,000 Accounts receivable – January 1, 20x4 . . . . . . . . 43,000 Accounts receivable – December 31, 20x4 . . . . . . . 49,000 Accounts receivable written off . . . . . . . . . . . 1,500 Inventory - January 1, 20x4 . . . . . . . . . . . . . 37,000 Inventory – December 31, 20x4 . . . . . . . . . . . . 41,000 Expenses (charged by Home Office) . . . . . . . . . . 50,000 All cash collected on accounts receivable are remitted to the home office. Determine: 1. The balance of the Home Office Current account on January 1, 20x4 is: a. P 72,800 c. P83,000 b. P 84,500 d. None of the above. 2. The net income of the Ilocos Branch for the year ending December 31, 20x4 is: a. P 10,000 c. P104,000 b. P 64,000 d. None of the above. 3. The total remittance for the year 20x4 is: a. P187,500 c. P190,500 b. P189,000 d. P193,500 4. On December 31, 20x4, the Branch Current account on the home office books would show a balance of: a. P 93,000 c. P 95,500 b. P 43,000 d. None of the above.

Included in the accounting records of the home office and the only branch, respectively, of Socrates Company were the following ledger accounts for June, 20x2:

Date 20x2 May 31 June 6 20 26 30 Date 20x2 May 31 June 8 18 27 30

Investment in Plato Branch Explanation Debit Balance Shipment of merchandise Receipt of cash Collection of branch trade account receivable Shipment of merchandise Home Office Explanation Balance Receipt of merchandise Payment of cash Acquisition of office equipment Payment of cash

Credit

Balance

11,500 9,000

51,000 81,500 70,000 61,000

30,500

24,000 Debit

85,000 dr Credit 30,500

11,500 14,500 22,000

dr dr dr dr

Balance 51,000 81,500 70,000 55,500 33,500

cr cr cr cr cr

The reconciled amount of the reciprocal account is: a. P48,500 c. P63,000 b. P57,500 d. P70,500 Pasig Garment Company operates a branch in Cabanatuan City. At the end of the year, the Branch account in the books of the home office at Manila shows a balance of P150,000. The following information are ascertained:  The home office has billed the branch the amount of P37,500 for the merchandise, which was in transit on December 31.  A home office accounts receivable for P10,500 was collected by the branch. Said collection was not reported to the home office by the branch.  Supplies of P4,500 was returned by the branch to the home office but the home office has not yet reflected in its records the receipt of the supplies.  The branch made profit of P10,100 for the month of December but the home office erroneously recorded it as P11,180.  The branch has not received the cash in the amount of P25,000 sent by home office on December 31. This was charged to General Expense account. All transactions are presumed to have been properly recorded. 1. What is the balance of the Home Office account on the books of the branch as of December 31, before adjustments? a. P121,920 c. P117,420 b. P123,000 d. P106,920 2. What is the adjusted balance of the reciprocal accounts? a. P 96,420 c. P117,420 b. P106,920 d. P179,920 Ryder Corporation has one branch operation located 500 miles away from the home office. The branch office sells merchandise which is shipped to it from the home office. The merchandise is transferred at cost but the branch pays reasonable freight charges. The branch office makes sales and incurs and pays operating expenses. At the end of the current accounting period the true adjusted balance for the home office account on the branch’s books and the branch office account on the home office’s books is P500,000. The following items may or may not be reconciling items. The current year is 20x4.  The home office has shipped merchandise to the branch office which cost P10,000 and which incurs P500 freight charges paid by the home office but charged to the branch. This merchandise is received by the branch on January 5, 20x5.

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The branch has transmitted P17,000 in cash back to the home office as a partial payment on such purchased merchandise. This cash is received by the home office on January 6th, 20x5. The branch office returns some defective merchandise to the home office. The cost of the returned merchandise is P750. The branch office pays P25 of freight costs which will be charged back to the home office. On December 1, 20x4, the home office sends a check for P25,000 to replenish the branch’s working capital. The check is received on January 4, 20x5. The branch pays an advertising expense of P800 that should have been paid by the home office since it applied to advertising fees incurred by the home office for its own benefit. The home office allocated P12,000 of general and administrative expenses to the branch. The branch had not entered the allocation as of the end of the year. The home office pays insurance premiums on the branch store. The amount paid by the home office is P1,000 but the branch erroneously records it as P776.00

Compute the unadjusted balances for the branch and December 31, 20x4. Home Office Current Branch Current a. P481,425 P433,701 b. P500,000 P500,000 c. P452,276 P518,575 d. P518,575 P452,276

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Hope Company operates a main store at its home office and a branch store in another city. The branch purchases most of its merchandise from the home office at 10% above home office cost. All merchandise acquired from other suppliers is accounted for by the branch at original cost. At September 30, 20x8, the records of the branch indicated the following: September Sales….........P140,000 Inventory, September 1………… 35,200* (50% from outside suppliers) Shipments from home office 55,000 (at billed price) Purchases from outsiders…. 24,000 Selling expenses…..........8,000 General expenses….........32,000 Inventory, September 30… 30,000 (P8,000 from outside suppliers) *Merchandise acquired from the home office is inventoried at billed prices.

Required: 1. Give the journal entries on the home office and branch books to record the shipments. 2. Prepare the income statement for the branch. 3. Prepare all necessary entries on the home office books at September 30, 20x8 to adjust the home office records for the branch operations for September. The following information came from the books and records of Davao Corporation and its branch. The balances are as of December 31, 20x8, the fourth year of the corporation’s existence. Home Office Branch Dr. (Cr.) Dr. (Cr.) Sales P(1,700,000) Shipments to branch P(480,000) Shipments from home office 720,000 Purchases 360,000 Expenses 320,000 Inventory, January 1, 20x8 144,000 Unrealized profit in branch inventory (272,000) There are no shipments in transit between the home office and the branch. Both shipments accounts are properly recorded. The closing inventory at billed prices includes merchandise acquired from the home office in the amount of P108,000 and P60,000 acquired from the vendors for a total of P168,000....