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    The Elizabeth Company opened a new branch office on January 2, 20XX. The document provides the balance sheet of the home office as of this date and summarizes transactions between the home office and branch for the year. It lists cash transfers, merchandise transfers, sales, purchases, collections and payments between the offices. It also provides adjusting entries needed at year-end for each office for depreciation, inventory, prepaid expenses and accrued expenses. Financial statements are to be prepared for each office individually and combined.

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    Aa 3

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    950 views4 pages
    The Elizabeth Company opened a new branch office on January 2, 20XX. The document provides the balance sheet of the home office as of this date and summarizes transactions between the home office and branch for the year. It lists cash transfers, merchandise transfers, sales, purchases, collections and payments between the offices. It also provides adjusting entries needed at year-end for each office for depreciation, inventory, prepaid expenses and accrued expenses. Financial statements are to be prepared for each office individually and combined.

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    Accounting Questions 3

    Original Title

    AA 3

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    The Elizabeth Company opened a new branch office on January 2, 20XX. The document provides the balance sheet of the home office as of this date and summarizes transactions between the home office and branch for the year. It lists cash transfers, merchandise transfers, sales, purchases, collections and payments between the offices. It also provides adjusting entries needed at year-end for each office for depreciation, inventory, prepaid expenses and accrued expenses. Financial statements are to be prepared for each office individually and combined.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    950 views4 pages

    Aa 3

    Uploaded by

    Unknown 01
    The Elizabeth Company opened a new branch office on January 2, 20XX. The document provides the balance sheet of the home office as of this date and summarizes transactions between the home office and branch for the year. It lists cash transfers, merchandise transfers, sales, purchases, collections and payments between the offices. It also provides adjusting entries needed at year-end for each office for depreciation, inventory, prepaid expenses and accrued expenses. Financial statements are to be prepared for each office individually and combined.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 4

    On January 2, 20XX, Elizabeth Company opened a new branch in a neighboring city.

    The balance sheet of the home office


    on January 2, 20XX is given below:

    Elizabeth Company (Home Office)


    Balance Sheet
    January 2, 20XX
    Assets Liabilities and Shareholder’s Equity

    Cash 88,950 Accrued Expenses 1,875


    Accounts Receivable 41,475 Accounts Payable 34,200
    Merchandise Inventory 60,180 Share Capital, P20 par 75,000
    Prepaid Expenses 2,700 Retained Earnings 105,630
    Furnitures and Fixtures 30,000
    Less: Accumulated Depreciation (6,600)

    Total Assets 216,705 Total Liabilities and Shareholders’ 216,705


    Equity
    The following is the summary of the transactions of the home office and the branch for
    20XX:

    Home Office Transactions

    a. Transfers of cash to branch, P63,750.


    b. Transfers of merchandise to branch (billed at cost), P75,300.
    c. Sales on account,P157,500.
    d. Purchases on account,P183,750.
    e. Collection of accounts, P170,400.
    f. Payment of accounts,P186,000.
    g. Expenses paid,P39,900.
    h. Cash received from branch, P80,100.
    i. Dividends paid, P15,000.

    Adjusting
    dat
    a
    on
    De
    ce
    mb
    er
    31:
    De
    pre
    ciat
    ion
    for
    the
    yea
    r,
    P1,
    77
    0.
    Me
    rch
    and
    ise
    Inv
    ent
    ory,
    P7
    2,7
    50.
    Pre
    pai
    d
    Ex
    pen
    ses,
    P3,
    07
    5.
    Accrued Expenses, P2,025.

    Branch Transactions

    a. Cash received from home office,P63,750.


    b. Merchandise received from home office, P75,300.
    c. Sales on account,P99,000.
    d. Purchases on account,P33,750.
    e. Collections of accounts deposited to the credit of home office, P80,100.
    f. Payment of accounts,P18,375.
    g. Purchase of furniture and fixtures for cash, P12,000.
    h. Expenses paid,P27,000.

    Adjusting
    dat
    a
    on
    De
    ce
    mb
    er
    31:
    De
    pre
    ciat
    ion
    for
    the
    yea
    r,
    P9
    75.
    Me
    rch
    and
    ise
    Inv
    ent
    ory,
    P3
    5,2
    50.
    Pre
    pai
    d
    Ex
    pen
    ses,
    P1,
    12
    5.
    Accrued Expenses, P450.

    Required:
    1. Prepare the journal entries to record the foregoing transactions for the branch and the
    home office.
    2. Prepare the journal entries to adjust and close the books for branch and the home office.
    3. Prepare individual statements for the branch and the home office.
    5. Prepare the combined statements for the branch and the home office.

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