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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

65,000

7,200
25,000
25,000
300

AA1- Chapter 8 (2012 edition)

page 162

Office Supplies Expense

(h)
(I)

(j)

300

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

Furniture and Fixtures

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

32,000
15,000
5,500
5,500
550
550
2,600
2,600

AA1- Chapter 8 (2012 edition)

page 163

Branch Office Books

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

Home Office
Cash

20,000

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)

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

AA1- Chapter 8 (2012 edition)

(4)

(5)
(6)
(7)

page 164

Cash
Sales Discount
Accounts Receivable

288,000
6,000

Home Office
Cash

150,000

294,000
150,000

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.
Income Statement - Branch
For the Year Ended December 31,2012
Sales
Less: Sales Discount
Cost of sales:
Shipment to Home Office
Less: Inventory, end
Gross Profit
Expenses
Net Profit

P 390,000
6,000
P 300,000
60,000

P384,000
240,000
P 144,000
82,000
P 62,000

(d)
Honda Sales, Inc.
Statement of Financial Position - Branch
December 31,2012
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

AA1- Chapter 8 (2012 edition)

page 165

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

2,000
212,000
P 214,000

Exercise 8- 5
Home Office Books
(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

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

Branch Office Books

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

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

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

6,500
2,000

AA1- Chapter 8 (2012 edition)

20
25
30
31

page 166

Home Office
Shipments from Home Office

1,200
1,200

Home Office
Accounts Receivable

150

Expenses
Home office

800

Home Office
Income Summary

750

150
800
750

Exercise 8 -7
Honda Company
Reconciliation of Home Office and Branch Accounts
December 31,2012

Unadjusted balances
Adjustments;
(a) Merchandise in transit
(b) Collection of home office accounts recl
(c) Error in recording the net income of branch
(P1,215 - P1,125)
(d) Merchandise returned by branch still in
Transit
Adjusted balances

HO
Books
Branch Acct.
P 8,400

Branch
Books
HO Acct.
P 9,735
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

615
615

Exercise 8-8
Home Office Books
(a)

Allowance for Doubtful Accounts

Makati Branch

600
600

AA1- Chapter 8 (2012 edition)

(b)
(c)
(d)

page 167

Makati Branch
General and Administrative Expense

1,250

Manila Branch
Makati Branch

1,200

1,250
1,200

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)

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

Rent Expense - Cebu Agency

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

330,000
250,000

250,000
15,000
3,000
2,200
20,200

AA1- Chapter 8 (2012 edition)

(f)

(g)
(g)
(h)

(l)

page 168

Salaries and Wages - Cebu Agency

Commission Expense - Cebu Agency
Salaries and Wages
Commission Expense

10,200
33,000

Samples Expense - Cebu Agency

Samples - Cebu Agency

15,000

Advertising Materials Expense - Cebu Agency

Advertising Materials - Cebu Agency

10,500

10,200
33,000
15,000

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
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
Branch
Shipments to Branch

(c)

No entry

(d)

Branch
Cash
Equipment
Gain on Transfer of Equipment

(e)

No entry

(f)

Expenses
Cash

(g)

and (h) no entry

(I)

Cash
Branch

150,000
150,000
90,000
90,000

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

7,500
7,500

52,500
52,500

AA1- Chapter 8 (2012 edition)

page 169

Branch Books
(a)
(b)
(c)
(d)
(e)

Cash
Home Office
Shipments from Home Office
Home Office
Purchases
Cash
Equipment
Home Office

150,000
150,000
90,000
90,000
120,000
120,000
90,000
90,000

Accounts Receivable
Sales

250,000

Cash
Accounts Receivable

100,000

250,000
100,000

(f)

No entry

(g)

Depreciation Expense Equipment

Accumulated Depr. Equipment

9,000

Selling and Administrative Expenses

Cash

45,000

Home Office
Cash

52,500

(h)
(i)

9,000
45,000
52,500

Problem 8-3
Requirement 1
a.
b.
c.
d.
e.

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

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

AA1- Chapter 8 (2012 edition)

f.
g.
h.
i.
j.

page 170

Allowance for Uncollectible Accounts

Accounts Receivable

1,200
1,200

Home Office
Cash

30,000

Expenses
Cash

24,800

30,000
24,800

Expenses
Home Office

1,600

Prepaid Expenses
Accrued Expenses
Expenses
Allowance for Doubtful Accounts
Accumulated Depreciation

200
400
1,700

1,600

Merchandise Inventory, end

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

1,100
1,200
38,800
80,000
3,300
33,000
40,000
21,000
28,100
3,300
3,300

Requirement 2
Volvo Company
Income Statement - Branch
For the Year Ended December 31, 2012
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

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

AA1- Chapter 8 (2012 edition)

page 171

Volvo Company
Statement of Financial Position - Branch
December 31, 2012
Assets
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, 2012
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

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

Requirement 3
c.
Davao Branch
Shipments to Branch

40,000

30,000

Cash
Davao Branch
Davao Branch
Cash
Branch Income
Davao Branch

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

40,000
30,000
1,600
1,600
3,300
3,300

AA1- Chapter 8 (2012 edition)

page 172

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

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

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

Accounts Receivable
Sales

143,000
15,000
102,000
26,000
9,000
9,000
346,000
346,000

AA1- Chapter 8 (2012 edition)

c.
d.
e.
f.

g.
h.
i..

page 173

Cash
Accounts Receivable

400,000

Purchases
Accounts Payable

316,000

Accounts Payable
Cash

362,000

Expenses
Accrued Expenses
Cash

89,500
2,500

400,000
316,000
362,000

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
Income Statement - Bacolod Branch
For the Month Ended January 31, 2012
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
Jazz Company
Statement of Financial Position - Bacolod Branch
January 31, 2012
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)
Total Liabilities

P 62,000
P120,500
30,000
P150,500
104,000

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

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

AA1- Chapter 8 (2012 edition)

page 174

Jazz Company
Income Statement - Home Office
For the Month Ended January 31, 2012
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
10,995
P25,655

Jazz Company
Statement of Financial Position - Home Office
January 31, 2012
Assets
Cash (150,000 - 15,000 + 400,000 362,000 - 92,000 + 10,000)
P 91,000
Accounts Receivable (420,000 - 26,000 + 346,000 - 400,000)
P340,000
Less Allowance for Uncollectible Accounts (12,000 - 1,500)
10,500
329,500
Merchandise Inventory
445,000
Branch (143,000 - 9,000 - 1,500 + 12,500 - 10,000
+ 6,000 + 4,750+ 350 - 5,600)
140,500
Store Furniture and Fixtures (150,000 + 9,000)
P159,000
Less Accumulated Depreciation (46,000 + 1,350)
47,350
111,650
Total Assets
P1,117,650
Liabilities and Shareholders Equity
Accounts Payable (337,500 + 316,000 - 362,000)
P 291,500
Accrued Expenses
7,500
Income Tax Payable
10,995
Ordinary Share Capital
500,000
Retained Earnings (282,000 + 25,655)
307,655
Total Liabilities and Shareholders Equity
P1,117,650
Requirement 3
Jazz Company
Combined Income Statement for Home Office and Branch
For the Month Ended January 31, 2012
Sales
P408,000
Cost of Goods Sold:
Merchandise Inventory, January 1
P460,000
Purchases
346,000
Cost of Goods Available for Sale
P806,000
Less Merchandise Inventory, December 31
549,000
257,000
Gross Profit
P151,000

AA1- Chapter 8 (2012 edition)

page 175

Expenses
Net Profit
Income Tax
Net profit

114,350
P 36,650
10,995
P 25,655
Jazz Company
Combined Statement of Financial Position for Home Office and Branch
January 31, 2012
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

Liabilities and Shareholders Equity

Accounts Payable
Accrued Expenses
Income Tax Payable
Ordinary Share Capital
Retained Earnings
Total Liabilities and Shareholders Equity

374,000
549,000
111,650
P1,136,650
P 307,000
11,000
10,995
500,000
307,655
P1,136,650

Requirement 4
Branch Books
a.
b.
c.

d.
e.

Shipments from Home Office

Home Office

6,000

Expenses
Home Office

4,750

Expenses
Home Office
P22,500 + P9,000 = P31,500/7.5 yrs x 1/12
Expenses
Accrued Expenses
Sales
Merchandise Inventory, end
Income Summary
Shipments from Home Office
Purchases
Expenses
Home Office
Income Summary

6,000
4,750
350
350
3,500
3,500
62,000
104,000
5,600
120,500
30,000
21,100
5,600
5,600

AA1- Chapter 8 (2012 edition)

page 176

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 )

1,000
350

Expenses
Accrued Expenses

7,500

Branch Income
Bacolod Branch

5,600

6,000
4,750

1,350

7,500
5,600

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

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

Income Tax
Income Tax Payable

10,995

Income Summary
Income Tax

10,995

Income Summary
Retained Earnings

25,655

10,995
10,995
25,655

Problem 8-5
Requirement 1

Debits
Cash
NR
AR
Inventories
F&E

HO
63,000
10,500
120,600
143,700
72,150

Feroza Company
Working Paper for Combined Financial Statements
For the Year Ended December 31,2012
Adjustments
Combined Income
Eliminations
Statement
BR
Dr.
Cr.
Dr.
Cr.
21,900
55,950
36,300

Combined Balance
Sheet
Dr.
Cr.
84,900
10,500
176,550
180,000
72,150

AA1- Chapter 8 (2012 edition)

Branch Cu.
CGS
OE
Credits
AP
CS
HO Cur.
RE
Sales

page 177

124,050
300,750
104,250
939,000

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

a.124,050
37,500

151,650
275,700

124,050

Net Profit

124,050

566,550
125,100
691,650

Requirement 2
a. Sales
Income Summary
Cost of Goods Sold
Operating Expenses
b.

691,650
691,650
691,650

524,100

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

Home Office
Income Summary

9,900
9,900

Requirement 3
a. Branch Income
Branch

9,900

Income Summary
Branch Income

9,900

Problem 8-6
Requirement 1
Isuzu Company
Reconciliation of Home Office and Branch Accounts
January 31, 2012

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

125,100
524,100

AA1- Chapter 8 (2012 edition)

page 178

Requirement 2
Home Office Books
a.

Cash
Retained Earnings
Accounts Receivable
Iloilo Branch

16,000
540
750
15,790
Branch Books

Advertising Expense
Shipments from Home Office
Home Office

Problem 8-7
Requirement 1
a.
Shipments from Home Office
Operating Expenses
Home Office Current
b.

600
4,310
4,910

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.
Freight-Out
Branch Current
b.
c.

470
470

Cash
Branch Current

19,200

Branch Current
Branch Income

116,990

19,200
116,990

Requirement 3
Ford Company
Reconciliation of Current Account
December 31,2012
Balances before adjustment
Shipment in transit
Advertising charged to branch
Rent charged to branch
Error in charging freight
Remittance in transit
Adjusted balances

Branch
Acct.
P 206,344

(470)
(19,200)
P 186,674

Home Office
Acct.
P120,974
57,600
4,200
3,900
P 186,674

AA1- Chapter 8 (2012 edition)

page 179

Problem 8-8
Mitsubishi Trading Company
Reconciliation of Home Office and Branch Accounts
December 31, 2012
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

3,000)
P222,770

Home Office Acct.

P220,485
3,150
(
675)
(
90)
(
800)
700
________
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.
2.
3.

B
A
B

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

P400,000
330,000
70,000
49,000
P 21,000

Sales

P46,500
x 70%
P32,550
1,100
P33,650

Cost of sales w/o freight

Add freight
Cost of sales w/ freight
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

P46,500
810

P 2,820
2,325
1,900

P45,690
33,650
P12,040

7,045
P 4,995

AA1- Chapter 8 (2012 edition)

page 180

Sales
Cost of sales
Gross Profit
Expenses
Net Income

8.
9.

D
B

P 87,500 / 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
11
12
13

A
C
B
A

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

P74,000

14
15
16
17
18

B
D
A
A
A

20
21

D
A

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

P39,750
P176,000
105,000
P 71,000
39,750
P 31,250

P67,680
9,180

P17,500 + 8,680

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

P 26,180

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

Home Office Current
Branch Income
Correct branch account - current

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

P90,000 + P14,400

P1,500 + 43,800 + 37,170

P 48,125
23,870
P 71,995

P112,500
P120,000
30,000

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

AA1- Chapter 8 (2012 edition)

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

A
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

page 181

P 195,120
P 37,170
136,000
P 173,170
41,370

BR. Acct.
P150,000

131,800
P 63,320
59,850
P 3,470
HO Acct.
P117,420
37,500

10,500
(4,500)
(1,080)
25,000
P179,920

25,000
P 179,920
P 179,920

P37,500 + P25,000 = P62,500

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

BR Acct.
P43,500

HO. Acct.
P41,990
60

(550)
900
P42,950

P42,950
29
30

A
B

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

D
Imprest branch fund
Accounts Receivable, Jan.1
Inventory, Jan.1
Home Office account

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

Branch A
P 2,000
55,000
21,000
P 78,000

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

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

AA1- Chapter 8 (2012 edition)

34
35

D
B

page 182

Imprest branch fund

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

P 1,500
53,500
12,000
P 67,000

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

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

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

P 107,970
37

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