Solano Ruth Home Office Seatwork
Solano Ruth Home Office Seatwork
Solano Ruth Home Office Seatwork
At the end of the year the Investment in Bacolod account of the home office
is P300,500. However there are transactions discovered to have errors.
5. What is the unadjusted balance of the home office current account in the
books of Bacolod at the end of the year?
a. 379,600
b. 252,000
c. 286,000
d. 315,800
a. 20,052 debit
b. 20,052 credit
c. 19,387.5 debit
d. 19,387.5 credit
7. What is the net adjustment of the home office current account in the
books of Bacolod branch at the end of the year?
a. 4,887.5 debit
b. 4,887.5 credit
c. 5,552 debit
d. 5,552 credit
SOLUTION: 4,652 + 900 = 5,552
SOLUTION:
Sales on Account
407,000
Cost of Sales:
Cost of Sales
(389,000)
Gross Profit
139,000
Expenses:
Credits:
Other liabilities P90,000 P25,000
Capital stock 500,000 -
Retained earnings 100,000 -
Home office - 175,000
Unrealized profit in branch 10,000 -
inventory/loading
Sales 537,500 300,000
Shipments to branch 200,000 -
Branch profit 62,500
Total credits P1,500,000 P500,000
Additional Information:
The combined net income of the home office and the branch amounted
to:
Home Office:
Sales 2,120,000
Less: Cost of Sales (50,000 + 500,000 - 200,000
- 700,000) 1,870,000
Expenses 764,000
Net Income -514,000 137,500
Branch:
Sales 300,000
Less: Cost of Sales (45,000 + 240,000 - 60,000) 225,000
Expenses 50,000
Net Income per Branch's Books 25,000
Realized Profit (225,000 x20%/120%) 37,500
Net Income per Home Office Books 62,500 62,500
Total 200,000
10. The Manila Branch of the Milestone Company is billed for merchandise
by the home office at 20% above cost. The branch in turn, prices
merchandise for sales purposes at 25% above billed price. On February
29, all of the branch merchandise branch merchandise is destroyed by
fire. No insurance was maintained. Branch accounts show the following
information:
The Davao City branch of Octagon Enterprise, Davao was billed for
merchandise shipments from home office at cost plus 25% 2017 and
cost plus 20 % in 2018. Other pertinent data for 2018:
11. What will bet the combined cost of sales of Davao branch and
Octagon’s home office that must be shown in the combined income
statement?
A. P224,300 B. P1,558,150 C. P1,558,700
D. P220,400
12. What will be the combined net income of Davao branch and Octagon’s
home office?
A. P224,300 B. P226,000 C. P221,330
D. P220,400
13. The following data were taken from the records of BMW Corporation of
Baguio and its Davao Branch for 2018:
Baguio Branch Davao Branch
Sales P530,000 P157,500
Inventory, January 1, 57,500 22,250
Purchases 410,000
Shipments to branch 410,000
Shipment from home 126,000
office
Inventory, December 71,250 29,250
31
Expenses 191,000 50,750
In 2018, Baguio Office billed the Davao Branch at 120% of cost which
was lower by 5% than last year’s. The combined net income of the
home office and the branch is:
A. P48,325 B. P48,575 C. P49,650 D. P56,075
SOLUTION: 35,500 + 20,575 = 56,075
14. The adjustment to the cost of goods sold of the branch account
amounts to:
A. P0 B. P14,000 C. P33,600 D. other
amount
15. The true net income of the branch during 2020 was:
A. P6,000 B. P33,600 C. P39,600 D. other
amount
16. The overstatement in the branch inventory at December 31, 2020 was:
A. P0 B.P6,000 C. P14,400 D. other
amount
SOLUTION: 50,400 x (40/140) = 14,400
TIM HORTONS Company set up a branch in a province. The entity and its
branch provided following data for the second year of branch operation:
- The home office to branch markup based on cost is 25% this year and last
year.
- 20% of the beginning inventory of the branch came from outside supplier.
- 24% of the ending inventory of the branch came from the last year's
shipment from the home office while 50% of the ending inventory of the
branch came from current years shipment from the home office.
17. What is the net income reported by the branch in its separate income
statement for the current year?
A. 130,000
B. 124,000
C. 114,000
D. 95,000
B. 115,000
C. 130,000
D. 122,600
SOLUTION: 80K + 50K = 130K – (50Kx 24%x20%) – (50k x 50% x
20%) = 122,600
19. What is the overstatement in the cost of goods sold reported by the
branch in its separate income statement for the current year?
A. 54,000
B. 50,000
C. 52,000
D. 47,400
The following information came from the books and records of Filipina
Corporation and its branch. The balances are as of December 31, 2019, the
third year of the corporation's existence.
The branch purchases all of its merchandise from the home office. The
inventories of the branch at billed prices are as follows:
20. Compute the percentage of profit on billed price that the home office
uses to ship merchandise to the branch.
A. 25%
B. 20%
C. 22.73%
D. 29.41%
SOLUTION: 220,000 + 30,000 + 25,000 = 225,000
50,000/225,000 = 22.22%
B. P270,000
C. P176,000
D. P245,000
B. P75,000
C. P120,000
D. P45,000