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    Illustrative Examples 7

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    Banjo A. Reyes
    The National Home Company has a provincial branch that operates independently, carrying its own accounts receivable and expenses. Based on the branch's 2011 trial balance, the branch's net profit was $14,400 and its current account balance in the home office books was $90,000.

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    Illustrative Examples 7

    Uploaded by

    Banjo A. Reyes
    30 views2 pages
    The National Home Company has a provincial branch that operates independently, carrying its own accounts receivable and expenses. Based on the branch's 2011 trial balance, the branch's net profit was $14,400 and its current account balance in the home office books was $90,000.

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    The National Home Company has a provincial branch that operates independently, carrying its own accounts receivable and expenses. Based on the branch's 2011 trial balance, the branch's net profit was $14,400 and its current account balance in the home office books was $90,000.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    30 views2 pages

    Illustrative Examples 7

    Uploaded by

    Banjo A. Reyes
    The National Home Company has a provincial branch that operates independently, carrying its own accounts receivable and expenses. Based on the branch's 2011 trial balance, the branch's net profit was $14,400 and its current account balance in the home office books was $90,000.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    1. The National Home Company Ships and bills merchandise to its provincial branch at cost.

    The
    branch carries its own accounts receivable and makes its own collections. The branch also pays
    its expenses.

    The transactions for 2011 are reflected in the branch trial balance that follows:
    Debit Credit
    Cash 11,900
    National Home Co. Current 90,000
    Shipments from National Home Co. 120,000
    Accounts Receivable 62,500
    Expenses 8,100
    Sales 112,500
    Total 202,500 202,500

    December 31 inventory 30,000

    Compute the (1) net profit of the branch and (2) the Branch Current Account in the home office
    books:
    a. (1) 22,500 (2) 90,000
    b. (1) 21,300 (2) 134,000
    c. (1) 14,400 (2) 104,400
    d. (1) 14,400 (2) 90,000
    2. A branch store in Caloocan was established by Carlo Company on March 1. Merchandise was
    billed to the branch 125% of cost. Shipments of merchandise were as follows:

    March 5 120,000 (at billed price)


    March 10 50,000 (at billed price)
    March 20 35,000 (at billed price)

    On March 22, the branch returned defective merchandise worth 3,050. On March 31, the
    branch reported a net loss of (6,200) and merchandise inventory of 85,000.

    In the home office books, the cost of merchandise sold by branch was:

    a. 161,560
    b. 93,560
    c. 116,950
    d. 161,950
    3. Leila Co’s Clark branch submitted the following data for 2011, its first year of operation:

    Sales 203,500 Cr
    Shipments from Home Office 186,120 Dr.
    Operating expenses 18,755 Dr.
    Home Office – current 48,125 Cr.
    Shipments to the branch are billed at cost. The December 31 inventory of the branch was
    25,245. What is the correct balance on December 31, 2011 of the Branch Account-current as per
    home office books?

    a. 46,750
    b. 48,125
    c. 65,505
    d. 71,995
    4. Barros Corporation’s shipments to and from its Brazil City branch are billed at 120% of cost. On
    December 31, Brazil branch reported the following data at billed prices: inventory, January 1 of
    33,600; shipments from home office of 840,000; shipments returned of 48,000; and inventory,
    December 31, of 36,000. What is the balance of the allowance for over-valuation of branch
    inventory on December 31 before adjustments?
    a. 5,600
    b. 137,600
    c. 6,000
    d. 145,600
    5. The Cindy owns the Highest Crowns in Dipolog City and a branch in Dapitan City. During 2021,
    the home office shipped to branch supplies costing 120,000 at a billed price of 20% above cost.
    The inventories of supplies at the branch were as follows: January 1, 2021,90,000; December 31,
    2011, 108,000. On December 31, 2011, the home office holds inventories of 160,500 which
    includes 10,500 held on consignment. Both locations use the periodic inventory method.

    How much is the inventories in a combined balance sheet as of December 31, 2021.
    a. 210,000
    b. 240,000
    c. 270,000
    d. 300,000

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