Escolar Documentos
Profissional Documentos
Cultura Documentos
SUGGESTED ANSWERS
EXERCISES
Exercise 9 - 1
Books of Branch R
Home Office
Cash
15,000
15,000
Books of Branch S
Cash
Home Office
15,000
15,000
Books of the Home Office
Branch S
Branch R
15,000
15,000
Exercise 9 - 2
Books of Branch No. 1
Home Office
Shipments from Home Office
Freight-In
1,950
1,600
350
Books of Branch No. 5
1,600
400
350
1,650
Books of the Home Office
Branch No. 5
Excess Freight
Branch No. 1
Exercise 9 3
1,650
300
1,950
Home Office Books
1.
no entry
2.
Branch
Shipments to Branch
Allowance for Markup in Branch Inventory
120,000/240,000 = 50%
3.
no entry
4.
Branch
Advertising Expense
Depreciation Expense
Utility Expense
no entry
5.
360,000
240,000
120,000
134,000
40,000
70,000
24,000
page 2
Cash
Branch
6.
no entry
7.
Branch
Branch Income
8.
9.
360,000
360,000
58,000
58,000
100,000
Branch Income
Income Summary
158,000
100,000
158,000
Branch Books
1.
2.
3.
4.
5.
6.
7.
Purchases
Accounts Payable
160,000
360,000
Accounts Receivable
Sales
652,000
Advertising Expense
Depreciation Expense
Utility Expense
Home Office
40,000
70,000
24,000
160,000
360,000
652,000
134,000
Cash
Accounts Receivable
470,000
Home Office
Cash
360,000
Merchandise Inventory
Sales
Purchases
Shipments from Home Office
Advertising Expense
Depreciation Expense
Utility Expense
Income Summary
60,000
652,000
Income Summary
Home Office
Exercise 9 - 4
a. Merchandise inventory, beg.
Less Merchandise from home office at billed price
470,000
360,000
160,000
360,000
40,000
70,000
24,000
58,000
58,000
58,000
P150,000
page 3
P 36,000
16,000
P 20,000
x 120/20
120,000
P 30,000
22,000
22,000
P36,000
14,000
P22,000
Exercise 9 5
1.
2.
no entry
3.
450,000
300,000
150,000
116,000
116,000
P 66,000
50,000
P116,000
Branch Books
1.
2.
3.
450,000
Accounts Receivable
Sales
P590,000 + P280,000 = P870,000
870,000
870,000
no entry
Exercise 9 6
1.
Branch
Cash
Shipments to Branch
Land
Allowance for Markup in Branch Inventory
Allowance on Transfer of Land
120,000/240,000 = 50%
2.
450,000
Branch
Shipments to Branch
820,000
80,000
240,000
300,000
120,000
80,000
560,000
400,000
page 4
5.
6.
160,000
Branch
Branch Income
130,000
200,000
130,000
200,000
P120,000
80,000
P200,000
80,000
80,000
Branch Income
Income Summary
410,000
410,000
Exercise 9 - 7
Required balance of allowance (markup on branch ending inventory)
P9,600 x 20/120
Adjustment for realized markup
Balance of allowance before adjustment
Allowance on current shipment (P160,000 x 20%)
Allowance on branch beginning inventory
Markup rate
Branch beginning inventory, at cost
P 1,600
36,400
P38,000
32,000
P 6,000
20%
P30,000
Exercise 9 - 8
a. Merchandise available for sale at billed price (P16,200 + P20,250)
Merchandise available for sale at cost (P36,450/135%)
Unrealized intercompany inventory profit balance before adjustment
b.
P36,450
27,000
P 9,450
4,550
4,550
P 9,450
4,900
P 4,550
Shipments to Branch
Unrealized Intercompany Inventory Profit
Branch
Branch Books
Home Office
Shipments from Home Office
400
140
540
540
540
page 5
Exercise 9 9
1. P20,000 25/125 = P100,000
2.
Exercise 9 - 10
Separate cost of goods sold of the home office:
Inventory, beginning
Purchases
Shipments to branch
Cost of goods available for sale
Less Inventory, end
Separate cost of goods sold of the branch:
Inventory, beginning
From outside purchases
From home office (P36,000 / 120%)
Total
Purchases
Shipments from home office (P720,000 / 120%)
Cost of goods available for sale
Less Inventory, end:
From outside purchases
From home office (P42,000 / 120%)
Combined cost of goods sold
Exercise 9 11
1.
Shipments from home office
Shipments to branch
Markup
74,000
74,000
P 252,000
2,800,000
( 600,000)
P2,452,000
240,000
P2,212,000
12,000
30,000
P 42,000
96,000
600,000
P 738,000
P10,000
35,000
Total
P450,000
375,000
P 75,000
45,000
Resold
P360,000
300,000*
P 60,000
693,000
P2,905,000
On Hand
P90,000
75,000**
P15,000
3.
Inventory, beginning
Shipments
Total
Inventory, end
Cost of goods sold
Exercise 9 - 12
a. Merchandise Inventory, January 1
Billed Price
P 60,000
450,000
P510,000
90,000
P420,000
420,000
420,000
Cost
P 50,000
375,000
P425,000
75,000
P350,000
Markup
P 10,000
75,000
P 85,000
15,000
P 70,000
P26,400
page 6
20,000
P46,400
P13,000
125%
Exercise 9 13
1. Branch Income
Cost of Goods Sold P230,000 x 15/115
Branch
2.
3.
10,400
P36,000
120%
P30,000
30,000
6,000
36,000
36,000
36,000
50,000
30,000
20,000
Home Office
Branch
520,000
520,000
9,000
9,000
PROBLEMS
Problem 9 1
Billed Price
Beginning inventory:
Acquired from vendors
Acquired from home office
Purchases from vendors
Shipments from Home Office P180,000 + P30,000
Total inventory available for sale
Less Ending inventory:
Acquired from vendors
Acquired from home office P60,000 + P30,000
Cost of goods sold
Cost
Markup
P100,000
40,000
240,000
210,000
P590,000
P100,000
32,000
240,000
168,000
P540,000
P 8,000
42,000
P50,000
40,000
90,000
P460,000
40,000
72,000
P428,000
18,000
P32,000
Problem 9 2
Home Office Books
a.
b.
c.
Dagupan Branch
Cash
10,000
Dagupan Branch
Baguio Branch
Shipments to Branch
25,000
40,000
17,500
10,000
65,000
17,500
d.
e.
f.
g.
h.
i.
j.
page 7
Expenses
Dagupan Branch
800
800
Baguio Branch
Sales Discounts
Accounts Receivable
29,400
600
Baguio Branch
Dagupan Branch
15,000
Shipments to Branch
Dagupan Branch
2,500
Dagupan Branch
Baguio Branch
1,800
30,000
15,000
2,500
1,800
Dagupan Branch
Shipments to Branch
Cash
20,100
Baguio Branch
Excess Freight
Dagupan Branch
20,110
35
20,000
100
20,145
Dagupan Branch Books
a.
b.
Cash
Home Office
10,000
25,000
c.
no entry
d.
Home Office
Cash
e.
f.
g.
h.
i.
j.
no entry
Home Office
Cash
10,000
25,000
800
800
15,000
15,000
Home Office
Shipments from Home Office
2,500
Expenses
Home Office
1,800
2,500
1,800
20,000
100
Home Office
Shipments from Home Office
Freight-In
20,145
20,100
20,000
100
page 8
Cash
45
Baguio Branch Books
a.
no entry
b.
40,000
40,000
c.
no entry
d.
no entry
e.
Cash
Home Office
29,400
Cash
Home Office
15,000
f.
g.
no entry
h.
Home Office
Cash
i.
no entry
j.
29,400
15,000
1,800
1,800
20,000
110
20,110
Problem 9 3
Requirement 1
1.
2.
3.
4.
20,000
20,000
259,000
185,000
74,000
245,000
245,000
Baguio Branch
Cash
7,000
7,000
5 7 - no entry
Baguio Branch Books
1.
2.
3.
Cash
Home Office
18,000
18,000
257,600
Home Office
247,400
257,600
page 9
Cash
4.
5.
6.
7.
247,400
Accounts Receivable
Home Office
2,400
Expenses
Home Office
7,000
Cash
Accounts Receivable
Sales
Expenses
Cash
2,400
7,000
247,400
40,600
288,000
21,000
21,000
Requirement 2
Baguio Branch
Branch Income
31,500
288,000
15,000
17,500
259,000
28,000
15,000
15,000
15,000
15,000
70,000
Branch Income
Income Summary
85,000
70,000
85,000
Requirement 3
Shipments from Home Office
Home Office
1,400
Cash
Home Office
2,000
1,400
2,000
Problem 9 - 4
Requirement 1
Triple D Bookstore
Statement of Recognized Income and Expenses - Quezon City Branch
For the Year Ended December 31, 2008
Sales
Cost of Goods Sold:
Merchandise Inventory, beginning
Shipments from Home Office
Cost of Goods Available for Sale
Less Merchandise Inventory, end
P192,690
P 31,500
128,000
P159,500
22,750
136,750
page 10
Gross Profit
Operating Expenses:
Advertising and Promotion
Depreciation
Uncollectible Accounts Expense
Others
Net income
P 55,940
P
6,400
2,400
1,250
36,600
P
Requirement 2
Branch
Branch Income
46,680
9,260
9,260
9,260
27,350
Branch Income
Income Summary
36,610
27,350
36,610
Problem 9 - 5
Branch Books
a.
b.
Sales
Merchandise Inventory, end
Income Summary
Merchandise Inventory, beginning
Shipments from Home Office
Selling Expenses
Administrative Expenses
Home Office
Income Summary
78,000
12,000
10,000
10,000
80,000
4,000
6,000
10,000
10,000
Home Office Books
a.
b.
c.
d.
e.
Sales
Shipments to Branch
Merchandise Inventory, end
Merchandise Inventory, beginning
Purchases
Selling Expenses
Administrative Expenses
Income Summary
310,000
64,000
30,000
25,000
300,000
20,000
30,000
29,000
Branch Income
Branch
10,000
15,600
Branch Income
Income Summary
Income Tax
Income Tax Payable
10,000
15,600
5,600
5,600
12,110
12,110
f.
g.
page 11
Income Summary
Income Tax
12,110
Income Summary
Retained Earnings
22,490
12,110
22,490
Problem 9 - 6
Requirement 1
Triple F Products Inc. - Branch
Trial Balance
December 31, 2008
Debit
12,800
48,160
27,280
Cash
Accounts Receivable
Merchandise Inventory
Accounts Payable
Home Office
Sales
Cost of Sales
Operating Expenses
Credit
2,040
68,900
256,000
191,620
47,080
326,940
_______
326,940
Requirement 2
Home Office Books
a.
b.
c.
d.
e.
f.
g.
Sales
Income Summary
Cost of Sales
Operating Expenses
640,600
41,360
452,840
146,400
Branch
Branch Income
17,300
17,420
Branch Income
Income Summary
34,720
Income Tax
Income Tax Payable
26,628
Income Summary
Income Tax
26,628
Income Summary
Retained Earnings
76,080
17,300
17,420
34,720
26,628
26,628
76,080
Branch Books
a.
b.
page 12
c.
Income Summary
Home Office
Requirement 3
13,200
13,200
256,000
17,300
191,620
47,080
17,300
17,300
P49,452
P156,640
36,800
P193,440
Problem 9 - 7
Triple G Company
Combined Statement of Recognized Income and Expenses
for Home Office and Branch
For the Year Ended December 31, 2008
Sales
Cost of goods sold:
Merchandise inventory, beginning
Purchases
Cost of goods available for sale
Less Merchandise inventory, end
Gross profit
Operating expenses
Net income before Income Tax
Income Tax
Net Income
P325,000
P107,500
215,000
P322,500
81,300
241,200
P 83,800
50,000
P 33,800
11,830
P 21,970
Inventory:
Beginning
Ending
Home Office
P 80,000
Branch
P7,500 + (P24,000/120%)
27,500
P5,500 + (P26,000/125%)
Total
P107,500
** P37,500 P30,000 = P7,500/ P30,000 = 25%
Requirement 2
Davao Branch Books
a. Sales
75,000
Merchandise Inventory, end
31,500
Income Summary
Shipments from Home Office
Purchases
Expenses
P55,000
26,300
P81,300
12,500
37,500
15,000
10,000
page 13
31,500
b.
Income Summary
Home Office
Requirement 3
12,500
12,500
Home Office Books
a.
b.
c.
d.
e.
f.
g.
Davao Branch
Branch Income
Allowance for Markup in Branch Inventory
Branch Income
Markup on branch beginning inventory
(P24,000 x 20/120)
Markup on shipments
Allowance balance before adjustments
Markup on branch ending inventory
(P26,000 x 25/125)
Realized markup
Sales
Shipments to Branch
Merchandise Inventory, end
Income Summary
Purchases
Expenses
Merchandise Inventory, beginning
12,500
12,500
6,300
6,300
P 4,000
7,500
P11,500
5,200
P 6,300
250,000
30,000
55,000
15,000
200,000
40,000
80,000
Branch Income
Income Summary
18,800
Income Tax
Income Tax Payable
11,830
Income Summary
Income Tax
11,830
Income Summary
Retained Earnings
21,970
18,800
11,830
11,830
21,970
Problem 9 8
Requirement 2
a. Plant Assets
Branch
4,000
b.
Home Office
Accounts Receivable
2,000
Cash
Branch
5,000
Expenses
Home Office
1,000
c.
d.
4,000
2,000
5,000
1,000
e.
f.
g.
h.
page 14
3,000
Retained Earnings
Inventory
P15,000 x 20/120
2,500
3,000
2,500
Home Office
Branch
11,000
Sales
Shipments from Home Office
48,000
11,000
48,000
page 15
MULTIPLE CHOICE
1.
3.
5.
7.
2.
page 16
4.
6.
10
11
12
13
C
C
D
C
14
15
8.
P132,000
88,000
P220,000
P165,250
9,000
P156,250
125%
P125,000
125%
100,000
P120,000
16
P370,000
195,000
P175,000
17
Sales
Cost of goods sold (P120,000 x 3/4 x 125%)
Gross profit
Operating expenses
Net income reported by the branch
P141,000
112.500
P 28,500
27,000
P 1,500
18
P50,400/120%
P42,000
19
20
(P 7,800)
12,180
P 4,380
21
P 4,800
1,520
P 6,320
22
P 4,400
11,200
P15,600
23
P 5,000
page 17
67,600
P 72,600
24
P31,000
6,600
P37,600
25
P60,000 - P7,500
P52,500
26
P15,000
27
Sales
Cost of goods sold (P180,000 + P45,000 - P60,000)
Operating expenses
Realized markup [(P180,000 x 20/120) - P7,500
True net income of the branch
P 292,500
(165,000)
( 72,000)
22,500
P 78,000
28
29
Sales
Cost of goods sold
(P54,600 + P390,000 + P144,600 - P48,750)
Operating expenses
Realized markup [P99,900 - (P39,000 x 30/130)]
True net income of the branch
P99,900
90,000
P 9,900
x 130/30
P 42,900
54,600
P 11,700
P540,000
(540,450)
( 51,000)
90,900
P 39,450
30
31
P115,520
( 91,500)
( 20,000)
P 4,020
32
P 4,020
18,300
P 22,320
33
Sales
Cost of goods sold (P5,000 + P2,000 + P26,400 P4,500)
Operating expenses
Realized markup [P2,800 (P3,960 x 10/110)]
True profit of Cebu branch
P 37,400
( 28,900)
( 3,000)
2,440
P 7,940
34
Sales
P110,000
page 18
36
Sales
Cost of sales:
Inventory, beginning
Purchases
Goods available for sale
Shipments to branch (P110,000/110%)
Goods available for own sale
Less Inventory, end
Gross profit
Expenses
Net income
Sales
Cost of sales:
Inventory, beginning (P11,550 P1,000)
Shipments from HO, including freight-in
Goods available for sale
Less Inventory, end
[(P10,400 + P5,000)/110%] + P520 + P250
Gross profit
Expenses
True branch net income
( 52,000)
( 10,000)
P 48,000
7,940
P 55,940
P155,000
P 23,000
190,000
P213,000
100,000
P113,000
30,000
83,000
P 72,000
52,000
P 20,000
P140,000
P 10,550
105,750
P116,300
14,770
101,530
P 38,470
28,400
P 10,470
37
P1,400
38
P 57,500
50,000
P 7,500
x 125/25
P 37,500
39
Sales
Cost of goods sold (P37,500 + P250,000 - P40,000)
Operating expenses
Net income reported by branch
P400,000
(247,500)
(100,000)
P 52,500
40
P 52,500
49,500
P102,000
41
Beginning inventory
Purchases
8,000
30,000
page 19
93,750
( 10,350)
P 121,400
( 18,550)
P 102,850
43
P156,000
60,000
P 96,000
P240,000
140%
44
P84,000 x 40/140
P24,000
45
20%
46
P444,000 / 120%
P370,000
47
Sales
Cost of goods sold (P75,000 + P444,000 - P84,000)
Operating expenses
Realized markup [P72,500 - (P84,000 x 20/120)]
Adjusted profit of the branch
P 600,000
(435,000)
(200,000)
58,500
P 23,500
48
49
50
P 150,000
90,000
P 240,000