P
PAMANTASAN NG AMANTASAN NG CABUYAOCABUYAO ADV
ADVANCED ACCANCED ACCOUNTINGOUNTING
HOME OFFICE AND BRANCH ACCOUNTING HOME OFFICE AND BRANCH ACCOUNTING
1. Leila Co's Clark branch submitted the following data for 2011, its first year of
1. Leila Co's Clark branch submitted the following data for 2011, its first year of operation:operation: Sales.
Sales. P203, P203, 500 500 CrCr Shipments
Shipments from from home home office. office. 186, 186, 120 120 DrDr Operating
Operating expensesexpenses. . 18, 755 18, 755 DrDr Home
Home office office current. current. 48, 48, 125 125 CrCr Shipments to the branch are billed at cost. The Decembe
Shipments to the branch are billed at cost. The December 31 inventory of r 31 inventory of the branch wasthe branch was P25, 245. What is the correct balance on December 31, 2011 of
P25, 245. What is the correct balance on December 31, 2011 of the Branch Account current asthe Branch Account current as per home office books?
per home office books? a.
a. P46, P46, 750. 750. c. c. P65, P65, 505505 b.
b. 48, 48, 125. 125. d. d. 71, 71, 995995
2. The following information pertains to shipments of
2. The following information pertains to shipments of merchandise from homerchandise from home office to branchme office to branch during 2011:
during 2011: Home
Home office's office's cost cost of of merchandisemerchandise. . P160, P160, 000000 Intra
Intra company company billing. billing. 200, 200, 000000 Sales
Sales by by branch branch 250, 250, 000000 Unsold
Unsold merchandise merchandise of of branch branch on on Dec Dec 31, 31, 2011. 2011. 20, 20, 000000 In the combined income statement of
In the combined income statement of home office and branch fohome office and branch for the year ended December 31,r the year ended December 31, 2011; what amount of
2011; what amount of the above transactions shthe above transactions should be included in sales?ould be included in sales? a.
a. P250, P250, 000 000 c. c. P200, P200, 000000 b.
b. 230, 230, 000 000 d. d. 80, 80, 000000
3. Barros Corporation's shipments to and from its Brazil city branch are billed at 120% of 3. Barros Corporation's shipments to and from its Brazil city branch are billed at 120% of cost.cost. On December 31, Brazil
On December 31, Brazil branch reported the following data, branch reported the following data, at billed prices; at billed prices; inventoryinventory, January 1,, January 1, of
of P33, 600; shipments P33, 600; shipments received received from home ofrom home office of ffice of P840, 000; shipments P840, 000; shipments returned ofreturned of P48, 000; and inventory
P48, 000; and inventory, December 31, of , December 31, of P36, 000. What is the balance of P36, 000. What is the balance of the allowance forthe allowance for over valuation of
over valuation of branch invbranch inventory on December 31 before adjustments?entory on December 31 before adjustments? a.
a. P5, P5, 600. 600. c. c. P6, P6, 000000 b.
b. 137, 137, 600. 600. d. d. 145, 145, 600600 4. The clark branch of freepor
4. The clark branch of freeport corporation submitted the fot corporation submitted the following trial balance as llowing trial balance as of of JuneJune 2011: 2011: Debit. Credit Debit. Credit Cash Cash P28, P28, 600600 Accounts receiv
Accounts receivable able 173, 800173, 800 Shipments
Shipments from from home home office office 462, 462, 000000 Home
Home office office current current 324, 324, 500500 Sales
Sales 369, 369, 600600
Expenses
Expenses 29, 29, 700700 Clark reported an ending inv
Clark reported an ending inventory of entory of P138, 600. Shipments are billed at a mark-up P138, 600. Shipments are billed at a mark-up of of 40% on40% on cost. What is the real net income of
cost. What is the real net income of Clark branch?Clark branch? a.
a. P92, P92, 400. 400. c. c. P70, P70, 600600 b.
5. Tillman textile company has a single branch in Bulacan on March 1, 2011, the home office 5. Tillman textile company has a single branch in Bulacan on March 1, 2011, the home office accounting records included an allowance for overvaluation of
accounting records included an allowance for overvaluation of inventorieinventories- Bulacan branchs- Bulacan branch ledger account with a credit balance of
ledger account with a credit balance of P32, 000. During March, merchandiP32, 000. During March, merchandise costing P36, 000se costing P36, 000 was shipped to
was shipped to the Bulacan branch bthe Bulacan branch billed at a price representing a 40illed at a price representing a 40% markup on the billed% markup on the billed price. On March 31, 2011, the branch prepared an inco
price. On March 31, 2011, the branch prepared an income statement indicating a net loss ofme statement indicating a net loss of P11, 500 for March and end
P11, 500 for March and ending inventorieing inventories at billed prices of s at billed prices of P25, 000. What is the amount ofP25, 000. What is the amount of adjustment for allowance fo
adjustment for allowance for overvaluation of r overvaluation of inventories to reflect the true branch net income?inventories to reflect the true branch net income? a.
a. P39, P39, 257 257 debit debit c. c. P39, P39, 333 333 debitdebit b.
b. P46, P46, 000 000 credit. credit. d. d. P46, P46, 000 000 debitdebit
6. The Gift co. has a branch in Dipolog City. During 2011, the home office shipped to the
6. The Gift co. has a branch in Dipolog City. During 2011, the home office shipped to the branchbranch merchandise billed at P150, 000 including a mark-up of
merchandise billed at P150, 000 including a mark-up of 20% on cost. The branch reports20% on cost. The branch reports opening and closing invento
opening and closing inventories of ries of P90, 000 and P120P90, 000 and P120, 000, respectively, 000, respectively, while the home offi, while the home officece has a closing inventories of
has a closing inventories of P210, 000 which includes merchandise which are held onP210, 000 which includes merchandise which are held on consignment valued at P10, 000. Both location use the
consignment valued at P10, 000. Both location use the periodic inventory system. What closingperiodic inventory system. What closing inventory would be reported in the combined stateme
inventory would be reported in the combined statement of nt of income for the year 2011?income for the year 2011? a.
a. P296, P296, 000. 000. c. c. P320, P320, 000000 b.
b. 300, 300, 000. 000. d. d. 330, 330, 000000 7. The Manila branch of
7. The Manila branch of the Great co. is billed for merchandise by the home office at 20% athe Great co. is billed for merchandise by the home office at 20% a bovebove cost. The branch in turn prices merchandise for sales purposes at
cost. The branch in turn prices merchandise for sales purposes at 25% above billed price. On25% above billed price. On February 16, all of
February 16, all of the branch merchandise is destroythe branch merchandise is destroyed by fire. No insurance was maintained.ed by fire. No insurance was maintained. Branch accounts show the following information:
Branch accounts show the following information: Merchandise
Merchandise inventoryinventory, , January January 1 1 (at (at billed billed price). price). P P 26, 26, 400400 Shipments
Shipments from from home home office office (Jan. (Jan. 1 1 - - FebFeb. . 16). 16). 20, 20, 000000 Sales.
Sales. 15, 15, 000000
Sales
Sales returns. returns. 2, 2, 000000 Sales
Sales allowancesallowances. . 1,0001,000 What was the cost of
What was the cost of the merchandisthe merchandise destroyed be destroyed by fire?y fire? a.
a. P36, P36, 000. 000. C. C. P36, P36, 800800 b.
b. 30, 30, 667. 667. d. d. 30, 30, 000000 8. Trial balances for the home office and the branch of
8. Trial balances for the home office and the branch of the Tthe Tony co. show the following accoony co. show the following accountsunts before adjustment, on Decemb
before adjustment, on December 31, 2011. The home office policy of er 31, 2011. The home office policy of billing the branch forbilling the branch for merchandise is 20% above cost.
merchandise is 20% above cost.
Home
Home office office BranchBranch Unrealized
Unrealized intercompany intercompany inventory inventory profit profit P10, 800P10, 800 Shipments
Shipments to to branch branch 24, 24, 000000 Purchase
Purchase (outsiders) (outsiders) P7, P7, 500500 Shipments
Shipments from from home home office office 28, 80028, 800 Merchandise
Merchandise inventoryinventory, , Dec. Dec. 1, 1, 2011 2011 45, 45, 000000 What part of
What part of the branch invthe branch inventory as of entory as of Dec. 1, 2011 represent purcDec. 1, 2011 represent purchases from ohases from outsiders andutsiders and what part represents goods acquired from
what part represents goods acquired from the home office?the home office? Outsiders
Outsiders Home Home officeoffice a. a. P12, P12, 000. 000. P33, P33, 000000 b. b. 16, 16, 500. 500. 28, 28, 500500 c. c. 15, 15, 000. 000. 30, 30, 000000 d. d. 9, 9, 000. 000. 36, 36, 000000
9. Swift corporation, operates a number of
9. Swift corporation, operates a number of branches in Metro Manila. On Jbranches in Metro Manila. On June 30, 2011, it's Sanune 30, 2011, it's San Lorenzo branch show
Lorenzo branch showed a home office account balance of ed a home office account balance of P27, 350 and tP27, 350 and the home office bookshe home office books showed a San Lorenz
showed a San Lorenzo branch account balance of o branch account balance of P25, 550. The following information may helpP25, 550. The following information may help in reconciling both accounts:
in reconciling both accounts: 1. A P12,
1. A P12, 000 shipment, charged by Home office to San Lorenzo branch, was actually sent to 000 shipment, charged by Home office to San Lorenzo branch, was actually sent to andand retained by Sto. Tomas branch.
retained by Sto. Tomas branch. 2. A P15,
2. A P15, 000 shipment, intended and charged to San Jose branch was shipped to San Lorenzo000 shipment, intended and charged to San Jose branch was shipped to San Lorenzo branch and retained by the
branch and retained by the latter.latter. 3. A P2,
3. A P2, 000 emergency cash transfer from Sto. T000 emergency cash transfer from Sto. Tomas branch was not taken up in the Homeomas branch was not taken up in the Home office books.
office books.
4. Home office collects a San Lorenzo branc
4. Home office collects a San Lorenzo branch accounts receivable of h accounts receivable of P3, 600 and fails to notifyP3, 600 and fails to notify the branch.
the branch.
5. Home office was charged for P1, 200
5. Home office was charged for P1, 200 for merchandise returned by San Lorenzo branch onfor merchandise returned by San Lorenzo branch on June 28 the merc
June 28 the merchandise is in tranhandise is in transit.sit.
Home office erroneously recorded San Lorenzo's net income for May
Home office erroneously recorded San Lorenzo's net income for May, 2011 at , 2011 at P16, 275. TheP16, 275. The branch reported a net incom
branch reported a net income of e of P12, 675.P12, 675. What is the reconciled amou
What is the reconciled amount of nt of the home office and San the home office and San Lorenzo branch Lorenzo branch reciprocal accounts?reciprocal accounts? a. P21, 750 a. P21, 750 b. b. 23, 23, 750750 c. c. 27, 27, 350350 d. d. 20, 20, 150150 10. Lakers Trading Co
10. Lakers Trading Co. Operates a branch in Dagupan city. Operates a branch in Dagupan city, at close of , at close of business on December 31,business on December 31, 2011, Dagupan branch account in the home office boo
2011, Dagupan branch account in the home office books showed a debit balance of ks showed a debit balance of P225, 770.P225, 770. The inter office accounts w
The inter office accounts were in agreement at the begere in agreement at the beginning of inning of the year. Fthe year. For purposes ofor purposes of reconciling the inter office accounts, the following facts were ascertained:
reconciling the inter office accounts, the following facts were ascertained: 1. An office equipment costing the home office P3,
1. An office equipment costing the home office P3, 500 was picked up by the branch as P350.500 was picked up by the branch as P350. 2. Insurance premium of
2. Insurance premium of P675 charged by th home office was takeP675 charged by th home office was taken up twice by the branch.n up twice by the branch. 3. Freight charge on merchandise made by the home office for P1,
3. Freight charge on merchandise made by the home office for P1, 125 was recorded in the125 was recorded in the branch books as P1, 215.
branch books as P1, 215.
4. Home office credit memo representing a discount on merchandise for P800 was not recorded 4. Home office credit memo representing a discount on merchandise for P800 was not recorded by the branch.
by the branch.
5. The branch failed to t
5. The branch failed to take up a P700 debit ake up a P700 debit memo from the home office representing the sharememo from the home office representing the share of
of the branch in advthe branch in advertising.ertising.
6. The home office inadvertently recorded a
6. The home office inadvertently recorded a remittance for P3, 000 from iremittance for P3, 000 from its Cebu branch as ats Cebu branch as a remittance from its Dagupan branch.
remittance from its Dagupan branch. Compute the balance as
Compute the balance as of of December 31, 2011.December 31, 2011. Unadjusted
Unadjusted Balance Balance Adjusted BalanceAdjusted Balance Of
Of the the home home office office account. account. Of Of the the reciprocal reciprocal accountaccount a. a. P226, P226, 485. 485. P225, P225, 770770 b. b. 228, 228, 485. 485. 228, 228, 770770 c. c. 225, 225, 770. 770. 226, 226, 485485 d. d. 226, 226, 485. 485. 228, 228, 770770
11. On December 3, 2011, the home office of
11. On December 3, 2011, the home office of Kathy Office Supply Company recorded aKathy Office Supply Company recorded a shipment of
shipment of merchandise to its Davao branch as follows:merchandise to its Davao branch as follows: Davao
Davao branch. branch. 30, 30, 000000 Shipments
Shipments to to branch. branch. 25, 25, 000000 Unrealized
Unrealized profit profit in in branch branch inventoryinventory. . 4, 4, 000000 Cash
Cash (for (for freight freight charges). charges). 1, 1, 000000 The Davao bran
The Davao branch sells 40% of ch sells 40% of the merchandise the merchandise to outside during the resto outside during the rest of t of December 2011.December 2011. The books of
The books of the home office anthe home office and Kathy office supply are closed Kathy office supply are closed on December 31 od on December 31 of f each yeareach year.. On Janua
On January 5, 2012, ry 5, 2012, the Davao branch tranthe Davao branch transfer half sfer half of of the original shipment to the Baguiothe original shipment to the Baguio branch, and e Davao branch pays P500
branch, and e Davao branch pays P500 as the shipment.as the shipment. The entry on the books of
The entry on the books of the Davao bthe Davao branch to record reranch to record receipt of ceipt of the shipment from the hthe shipment from the homeome office on December 3, 2011 would be:
office on December 3, 2011 would be: a.
a. Shipments Shipments from from Home Home office office 29, 00029, 000 Freight-out.
Freight-out. 1, 1, 000000 Home
Home office. office. 30, 30, 000000 b.
b. Shipments Shipments from from home home office office 25, 25, 000000 Accounts receiv
Accounts receivable. able. 4, 0004, 000 Freight-in.
Freight-in. 1, 1, 000000 Home
Home office. office. 30, 30, 000000 c.
c. Shipments Shipments from from home home office. office. 30, 30, 000000 Home
Home office. office. 30, 30, 000000 d.
d. Shipments Shipments from from home home office office 29, 29, 000000 Freight-in.
Freight-in. 1, 1, 000000 Home
Home office. office. 30, 30, 000000 12. Using the same information in No.11 at what amounts should the 60% of
12. Using the same information in No.11 at what amounts should the 60% of the merchandisethe merchandise remaining unsold at December 31, 2011 be included in (1) the inventory of
remaining unsold at December 31, 2011 be included in (1) the inventory of the Davao branch atthe Davao branch at December 31, 2011, and (2) the published balance sheet of
December 31, 2011, and (2) the published balance sheet of Kathy Office Supply Company atKathy Office Supply Company at December 31, 2011 shows inventory of:
December 31, 2011 shows inventory of: a. a. (1). (1). P15, P15, 600; 600; (2) (2) P18, P18, 000000 b. b. (1) (1) P17, P17, 400; 400; (2) (2) P15, P15, 000000 c. c. (1) (1) P18, P18, 000; 000; (2) (2) P P 15,60015,600 d. d. (1) (1) P18, P18, 400; 400; (2) (2) P P 16, 16, 000000
13. Using the same information in No
13. Using the same information in No. 11, what is the entry on the books of . 11, what is the entry on the books of Baguio branch forBaguio branch for the January 5, 2012 transfer, assumin
the January 5, 2012 transfer, assuming that the freight cost of g that the freight cost of the merchandise from tthe merchandise from the homehe home office to Baguio branch would have been P600:
office to Baguio branch would have been P600: a.
a. Shipments Shipments 15, 15, 100100 Home
Home office office 15, 15, 100100 b.
b. Shipments Shipments 14, 14, 500500
Freight-in. 600
Freight-in. 600
Home
Home office. office. 15, 15, 100100 c.
c. Shipments. Shipments. 15, 15, 000000
Freight-in. 600
Freight-in. 600
Home
Home office. office. 15, 15, 600600 d.
d. Shipments Shipments 14, 14, 500500 Freight-in
Freight-in 1, 1, 100100 Home
Home office. office. 15, 15, 600600
14. Using the same information in Nos. 11,12,13. What is the entry on the books of
14. Using the same information in Nos. 11,12,13. What is the entry on the books of DavaoDavao branch in respect to January 5, 2012 transfer:
branch in respect to January 5, 2012 transfer: a.
a. Home Home office office 15, 15, 500500 Inventory
Inventory 15, 15, 500500 b.
b. Home Home office. office. 15, 15, 100100 Shipments
Shipments inventory inventory 15, 15, 000000 Cash
Cash (for (for freight freight charges). charges). 100100 c.
c. Home Home office office 15, 15, 500500 Cash
Cash (for (for freight freight charges). charges). 500500 Inventory
Inventory 15, 15, 000000 d.
d. Home Home office. office. 15, 15, 600600 Cash
Cash (for (for freight freight charges). charges). 500500
Freight-in. 600
Freight-in. 600
Inventory
Inventory. . 14, 14, 500500
15. Using the same information in Nos. 11-13, what is the entry on the home office books in 15. Using the same information in Nos. 11-13, what is the entry on the home office books in respect to January 5, 2012 transfer:
respect to January 5, 2012 transfer: a.
a. Home Home office. office. 15, 15, 500.500.
Cash. 500 Cash. 500 Inventory Inventory. . 15, 15, 000000 b. b. Shipments. Shipments. 14, 14, 500500 Freight-in. 600 Freight-in. 600 Home
Home office office current current 15, 15, 100100 c.
c. Branch Branch current- current- BaguioBaguio. . 15, 15, 100100 Excess
Excess freight. freight. 400400 Branch
Branch current current -Davao-Davao. . 15, 15, 500500 d.
d. Branch Branch current-Baguio. current-Baguio. 15, 15, 100100 Excess
Excess freight. freight. 600600 Branch
