Suggested Answers: Exercise 8 - 1

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
Branch Income
Branch
32,000
15,000
5,500
5,500
550
550
2,600
2,600
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
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)

Home Office
300,000
Accounts Receivable
Sales
390,000
Expenses
Cash
Accrued Expenses
74,000
300,000
390,000
72,000
2,000
(4)
(5)
(6)
(7)
page 164
Cash
Sales Discount
Accounts Receivable
288,000
6,000
Home Office
Cash
150,000
294,000
150,000

Cash
40,000
40,000
Expenses
8,000
8,000
(b)
Merchandise Inventory
Sales
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)
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
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)

Branch
24,500
Branch
Cash
24,500
24,500
24,500
Branch
Furniture & Fixtures new
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
Home Office
2,500
2,500
10,000
10,000

Home Office
6,500
Home Office
Cash
2,000
6,500
2,000
20
25
30
31
page 166
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)

Home Office
615
615
Exercise 8-8
Home Office Books
(a)
Allowance for Doubtful Accounts

Makati Branch
600
600
(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
(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
page 169
Branch Books
(a)
(b)
(c)
(d)
(e)
Cash
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

Home office
40,000
Cash
Accounts Receivable
76,000
Accounts Payable
Cash
20,200
80,000
21,000
40,000
76,000
20,200
f.
g.
h.
i.
j.
k.
l.
page 170

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.
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
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
Prepaid Expenses
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:
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
g.
30,000
i.
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
page 172
Problem 8-4
Requirement 1
Branch Books
a.
Cash
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

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
a.
Bacolod Branch
Cash
Shipments to Branch
Accounts Receivable
Store Furniture and Fixtures
Bacolod Branch
b.
Accounts Receivable
Sales
143,000
15,000
102,000
26,000
9,000
9,000
346,000
346,000
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

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
page 174
Jazz Company
Income Statement - Home Office
Sales
Cost of Goods Sold:
Merchandise Inventory, January 1
Purchases
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
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
Sales
P408,000
Cost of Goods Sold:
Merchandise Inventory, January 1
P460,000
Purchases
346,000
P806,000
Less Merchandise Inventory, December 31
549,000
257,000
Gross Profit
P151,000
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
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.
f.

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
Income Summary
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
page 176
Home Office Books

a.
b.
c.
d.
e.
f.
g.
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
Income Summary
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
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
b.
9,900
9,900
Income Summary
Branch Income
9,900
Problem 8-6
Requirement 1
Isuzu Company
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
page 178
Requirement 2
Home Office Books
a.
Cash
Retained Earnings
Accounts Receivable
Iloilo Branch
16,000
540
750
15,790
Branch Books
a.
Advertising Expense
Home Office
Problem 8-7
Requirement 1
a.
Operating Expenses
Home Office Current
b.
c.
600
4,310
4,910
57,600
8,100
65,700
Sales
Income Summary
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
page 179
Problem 8-8
Mitsubishi Trading Company
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
4.
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
page 180
6.
7.
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
19
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:
Less Inventory, Dec. 31
Gross profit
Expenses
Net Profit
22
P90,000 + P14,400
23
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
24
25
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
26
27
28
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
31
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
32
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
33
34
35
D
B
36
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
38
Marketing Expense of another branch charged to Butuan

Butuans remittance credited to Davao
Net adjustment in Home Office Banch account
P (10,000)
( 65,700)
P (75,700)
39
Fixed account not recorded by Butuan

Inventory transfer recorded twice by Butuan
Error in recording debit memo
Net adjustment in Branch Books
P (53,960)
75,000
(
90)
P 20,950
40
D
Unadjusted balances
Net adjustment in Branch Account
Adjusted balances
Branch Account
P165,920
(75,700)
P 90,220
Home Off. Account

P111,170
(20,950)
P 90,220
41
P451,540 P6,000 P6,300 +P1,350 +P180 + P1,600 P1,400
42
P6,300 P 1,350 P180 P1,600 + P1,400
43
P451,540 P6,000
44
page 183
P440,970
P 4,570
P 445,540

Suggested Answers: Exercise 8 - 1

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CHAPTER 8

Working Fund Agency

Accounts Receivable Agency

Cost of Sales Agency

Working Fund - Makati Agency

Accounts Receivable - Makati Agency

Cost of Sales - Makati Agency

Salaries and Commission - Makati Agency

Delivery Expense - Makati Agency

Samples Expense - Makati Agency

AA1- Chapter 8 (2012 edition)

Office Supplies Expense

Depreciation Expense - Makati Agency

Shipments to Iloilo Branch

Furniture and Fixtures

AA1- Chapter 8 (2012 edition)

Branch Office Books

Shipments from Home Office

Shipments from Home Office

AA1- Chapter 8 (2012 edition)

Furniture and Fixtures

AA1- Chapter 8 (2012 edition)

Furniture and Fixtures

Branch Office Books

Shipments from Home Office

AA1- Chapter 8 (2012 edition)

Shipments from Home Office

Allowance for Doubtful Accounts

AA1- Chapter 8 (2012 edition)

General and Administrative Expenses

Uncollectible Accounts Expense

Samples - Cebu Agency

Working Fund - Cebu Agency

Accounts Receivable - Cebu Agency

Cost of Sales - Cebu Agency

Rent Expense - Cebu Agency

AA1- Chapter 8 (2012 edition)

Salaries and Wages - Cebu Agency

Samples Expense - Cebu Agency

Advertising Materials Expense - Cebu Agency

Sales - Cebu Agency

and (h) no entry

AA1- Chapter 8 (2012 edition)

Depreciation Expense Equipment

Selling and Administrative Expenses

Shipments from Home Office

AA1- Chapter 8 (2012 edition)

Allowance for Uncollectible Accounts

Merchandise Inventory, end

AA1- Chapter 8 (2012 edition)

Accounts Payable (4,000 + 21,000 - 20,200)

AA1- Chapter 8 (2012 edition)

Shipments from Home Office

AA1- Chapter 8 (2012 edition)

Allowance for Uncollectible Accounts

AA1- Chapter 8 (2012 edition)

AA1- Chapter 8 (2012 edition)

Liabilities and Shareholders Equity

Shipments from Home Office

AA1- Chapter 8 (2012 edition)

Home Office Books

AA1- Chapter 8 (2012 edition)

AA1- Chapter 8 (2012 edition)