True/False Questions
Chapter 12
Problem I(a)Working Fund Agency .. 5,000
Cash .
5,000
(b)Accounts Receivable .....................................50,000
Sales-Agency .
50,000
(c)Cash .....................................35,000
Accounts Receivable ..
35,000
(d)Expenses-Agency .. 4,500
Cash .
4,500
(e)Expenses-Agency .. 2,250
Cash .
2,250
(f)Cost of Goods Sold-Agency 36,000
Merchandise Shipments-Agency .
36,000Problem II
(a) Branch Books:
(a) Cash ..42,500
Home Office
42,500
(b) Shipments from Home Office 50,200
Home Office ...
50,200
(c) Accounts Receivable .60,000
Sales ..
60,000
(d) Purchases 22,500
Accounts Payable
22,500
(e) Home Office ..53,400
Accounts Receivable ..
53,400
(f) Accounts Payable ...12,250
Cash ..
12,250
(g) Furniture & Fixtures 8,000
Cash ..
8,000
(h) Expenses ..18,000
Cash ..
18,000
(b) Home Office Books:
(a) Branch .42,500
Cash .
42,500
(b) Branch 50,200
Shipments to Branch ..
50,200
(c) Accounts Receivable ...105,000
Sales
105,000
(d) Purchases .122,500
Accounts Payable .
122,500
(e) Cash ..113,600
Accounts Receivable
113,600
(f) Accounts Payable .124,000
Cash
124,000
(g) Expenses 26,600
Cash
26,600
(h) Cash ..53,400
Branch ...
53,400
(i) Retained Earnings .10,000
Cash ...
10,000BARTON CO.
Balance Sheet for Branch
December 31, 20x4
Assets
Liabilities
Cash
P 4,250
Accounts Payable P 10,250
Accounts Receivable
12,600
Accrued Expenses 300
Merchandise Inv...
23,500
Home Office .. 37,900
Prepaid Expenses
750
Furnitures & Fixtures .P 8,000
Less accum. Depr 650
7,350
Total Assets
P48,450
Total Liabilities .P48,450
BARTON CO.
Income Statement for Branch
For Year Ended December 31, 19X6
Sales P66,000
Cost of Goods Sold:
Purchases
P22,500
Shipments for home office .
50,200
Merchandise available for sale
P72,700
Less merchandise inv, December 31 ..
23,500
Cost of Goods Sold ..
49,200
Gross Profit .
P16,800
Expenses
18,200
Net loss ...
P 1,400
BARTON CO.
Income Statement for Branch
For Year Ended December 31, 20x4
Assets
Liabilities & Stockholders Equity
Cash ..
P 23,200
Liabilities
Accounts Receivable ..
19,050Accounts payable P 21,300
Merchandise Inventory
48,500Accrued Expenses . 1,350 P22,650
Prepaid Expenses .
2,050
Stockholders Equity
Furniture & Fixtures .P 20,000
Capital stock, P20 parP50,000
Less accum. Depr.. 5,580
14,420Retained Earnings . 72,740 122,470
Branch
37,900Total liabilities and stockholders
Total Assets ... P145,120
equity
P145,120
BARTON CO.
Income Statement for Home Office
For Year Ended December 31, 20x4Sales .......
P105,000
Cost of goods sold:
Merchandise inventory, January 1 .P 40,120
Purchases ... 122,500
Merchandise available for sale P162,620
Less shipments to branch ... 50,200
Merchandise available for own sale ..P112,420
Less merchandise inventory, December 31 . 48,500
Cost of Goods Sold .
63,920
Gross Profit
P 41,080
Expenses
27,630
Net income from own operations ..
P 13,450
Deduct branch net loss .
1,400
Total Income .
P 12,050
BARTON CO.
Income Statement for Home Office
For Year Ended December 31, 20x4
Sales .
P171,000
Cost of goods sold:
Merchandise inventory, January 1 ..P 40,120
Purchases 145,000
Merchandise available for sale P185,120
Less merchandise inventory, December 31 .. 72,000
Cost of goods sold .
113,120
Gross profit ..
P 57,880
Expenses ..
45,830
Net Income .
P 12,050
(a) Branch Books:
Expenses . 650
Accumulated Depreciation F&F.
650
Sales
66,000
Merchandise Inventory .
23,500
Income summary ..
89,500
Income Summary
90,900
Shipments from Home Office
50,200
Purchases
22,500
Expenses ..
18,200
Home Office
1,400
Income Summary
1,400
(b) Home Office Books
Expenses . 1,180
Accumulated Depreciation F&F.
1,180
Sales
105,000Merchandise Inventory .
48,500
Shipments to Branch ..
50,200Income summary ..
203,700
Income Summary
190,250
Merchandise Inventory
40,120
Purchases .
122,500
Expenses ..
27,630
Branch Income
1,400
Branch .
1,400
Income Summary ..
1,400
Branch Income
1,400
Income Summary ..
12,050
Retained Earnings ..
12,050
Problem III
(a) Branch Books:
Jan.
1Cash . 1,500
Home Office
1,500
1 Shipments from home office . 10,200
Home Office
10,200
1Home Office .. 900
Cash ..
900
1 Accts. Rec. Home office . 2,600
Home Office
2,600
1-31Accts. Rec.-Home Office . 6,200
Sales ..
6,200
1-31Cash .. 2,600
Accounts Receivable ..
2,600
1-31Purchases . 3,000
Accounts Payable
3,000
1-31Accounts Payable . 1,450
Cash ..
1,450
1-31Expenses .. 1,250
Cash .
1,250
Jan.1-31Cash 1,600
Accts. Rec.-Home Office ...
1,600
1-31Home Office 150
Accts. Rec.-Home Office .
150
1-31Shipments from Home Office 1,250
Home Office .
1,250
1-31Home Office 1,000
Cash
1,000
(b) Home Office Books:
Jan. 1Branch .. 1,500
Cash
1,500
1 Branch .. 10,200Shipments to Branch ..
10,200
1 Store Furniture and Fixtures Branch .. 3,000Store Furniture and Fixtures ...
3,000
1 Accumulated Depr. Store F&F .. 750
Accumulated Depr. Store Furniture
And Fixtures, Branch ..
750
Calculation of depreciation: 2.5years at P300, (10% of
P3,000), or P750
1 Store Furniture and Fixtures Branch .. 900
Branch
900
1Branch 2,600
Accounts Receivable .........
2,600
1-31Accounts Receivable 34,600
Sales ................................
34,600
1-31 Cash . 40,000
Accounts Receivable
40,000
1-31Purchases .31,600
Accounts Receivable .
31,600
1-31Accounts Payable 36,200
Cash ...
36,200
1-31Accrued Expenses Payable . 250
Expenses . 8,950
Cash ..
9,200
1-31Allowance for Doubtful Accounts .. 150
Branch ..
150
1-31Branch . 1,250
Shipments to Branch
1,250
1-31Cash 1,000
Branch .
1,000
EAGLE CO.
Balance Sheet
January 31, 20x4
Assets
Liabilities
Cash ............................P 1,100Accounts Payable . P 2,400
Accounts Receivable .. 3,600Accrued expenses . 400
Accts. Rec.-home office . 850Home Office 14,050
Merchandise Inventory 9,800
Merchandise in Transit . 600
Total assets
P37,200Total Liabilities . P37,200
EAGLE CO.
Income Statement for Branch
For Month Ended January 31, 20x4
Sales .P 6,200
Cost of Goods Sold:
Purchases
P 3,000
Shipments from home office .
11,450
Shipments from home office in transit ..........
600
Merchandise Available for Sale ..
P15,050
Less merchandise inv. Dec 31, 19X9 ................P9,800
Merchandise in transit .. 600 10,400
Cost of Goods Sold . 4,650
Gross Profit P 1,550
Expenses 2,110
Net Loss ....P 560
EAGLE CO.
Balance Sheet for Home Office
January 31, 20x4
Assets
Cash
P 9,100
Accounts Receivable P34,000
Less allowance for doubtful accounts .. 1,050
32,950
Merchandise Inventory .
44,500
Store furniture and fixtures P12,000
Less accumulated depreciation . 3,950
8,050
Store furniture and fixtures-branch P 3,900
Less accumulated depreciation 785
3,315
Branch office ...
14,050
Total Assets
P111,765
Liabilities
Accounts Payable .. P29,150
Accrued Expenses .. 750
Total Liabilities ..
P29,900
Stockholders Equity
Capital Stock P50,000
Retained earnings .. 31,865
Total stockholders equity
81,865
Total liabilities and stockholders equity
P111,765
EAGLE CO.
Income Statement for Home Office
For Month Ended January 31, 20x4
Sales
P 34,600
Cost of goods sold:
Merchandise inventory, January 1 ..
P46,000
Purchases
31,600
Merchandise available for sale
77,600
Less shipments to branch
12,050
Merchandise available for own sales .
P65,550
Less merchandise inventory, January 31
44,500
Cost of goods sold
21,050
Gross Profit P 13,650
Expenses
9,325
Net income from own operations . P 4,225
Deduct branch net loss
560
Total Income P 3,665
EAGLE CO.Income Statement for Home Office
For Month Ended January 31, 20x4Assets
Liabiities and Stockholders Equity
Liabilities
Cash ... P 10,200Accounts Payable P30,700
Accounts receivable .. P38,450
Accrued Expenses 1,100P 31,800
Less allow for doubt-
Ful accounts .. 1,050 37,400
Merchandise Inventory .. 54,900
Stockholders Equity
Store furn. & fixtures P15,900
Capital Stocks P50,000
Less accum depr 4,735 11,165Retained earnings 31,865 81,865
Total assets P113,665Total liab. And stockholders equity .P113,665
EAGLE CO.
Combined Income Statement for Home Office and Branch
For Month Ended January 31, 20x4
Sales ..
P 40,800
Cost of goods sold:
Merchandise Inventory, January 1 .P46,000
Purchases ... 34,600
Merchandise available for sale ...P80,600
Less merchandise inventory, Jan 31 ... 54,900
Cost of goods sold ...............................
25,700
Gross profit ...
P 15,100
Expenses
11,435
Net Income ..
P 3,665
(a) Branch Books
Jan. 31Shipments from Office-in Transit 600
Home Office .
600
31Expenses . 475
Home Office .
475
31Expenses 35
Home Office ..
35
1/120 x P3,000, or P25 (depreciation for one month;
Asset life, 10 years); 1/90 x P900, or P10 (depreciation
For one month; asset life, 7.5 years)
31Merchandise Inventory 9,800
Merchandise in Transit .. 600
Income Summary
10,400
31Expenses .. 350
Accrued Expenses .
350
31Sales . 6,200
Income Summary ..
6,200
31Income Summary .17,160
Shipments from Home Office .
11,450
Ship. From Home Office in Trans .
600
Purchases
3,000
Expenses ..
2,110
31Home Office .. 560
Income Summary ...
560
(b) Home Office Books:
31Branch . 600
Shipments to Branch .
600
31Branch . 475
Expenses ...
475
31Branch . 35
Accumulated Depreciation, Store
Furniture and Fixtures Branch ..
35
31Expenses . 100
Accumulated Depreciation store
Furniture and Fixtures branch .
100
1/120 x P12,000, or P100 (depreciation for one
Month; asset life, 10 years)
31Income Summary 46,000
Merchandise Inventory
46,000
31Merchandise Inventory ..44,500
Income Summary ..
44,500
31Expenses . 750
Accrued Expenses .
750
31Sales 40,925
Purchases
31,600
Expenses ..
9,325
31Branch Income . 560
Branch ..
560
31Income Summary . 560
Branch Income ...
560
31 Income Summary . 3,665
Retained Earnings ..
3,665Problem IV1.Socrates Company
Home Office and Plato Branch
Reconciliation of Reciprocal Ledger Accounts
June 30, 20x4
Investment in
Plato Branch Home Office
LedgerLedger
AccountAccount
(Debit) (Credit)
Balances prior to adjustmentP85,000P33,500
Add: Merchandise shipped to branch
24,000
Less: Acquisition of office equipment by branch
(carried in accounting records of home office)(14,500)
Collection of branch trade accounts receivable
(9,000)
Payment of cash by branch (22,000)_______
Adjusted balancesP48,500P48,500
2. (a)Accounting records of home office:
Office Equipment: Plato Branch14,500
Investment in Plato Branch14,500
To record acquisition of office equipment by branch.
Cash in Transit22,000
Investment in Plato Branch22,000
To record cash in transit from branch.
(b)Accounting records of branch:
Home Office9,000
Trade Accounts Receivable9,000
To record collection by home office of branch accounts
receivable.
Inventories in Transit24,000
Home Office24,000
To record shipment of merchandise in transit from
home office. Problem V
((a)
BRANCHHOME OFFICE
ACCOUNT ACCOUNTBalances before Adjustments ..P 8,400
P 9,735
Adjustments:
Additions:
Merchandise in transit to branch .
615
Collection of Home office receivable by Branch 2,500
Understatement of branch net income for Nov.. 90
P10,990 P10,350
Deductions:
Merchandise return to home office in transit . 640
Corrected Balances P10,350 P10,350
(b) Branch Books:
Shipments from Home Office-in Transit . 615
Home Office ...
615
Home Office Books:
Branch 2,500
Accounts Receivable ..
2,500
Branch 90
Retained Earnings .
90
Merchandise Returns from Branch in Transit . 640
Branch ..
640
Problem VI
1.
Branch AccountHome office Account
Balances before adjustmentsP 77,150P 56,450
Adjustments:
Additions:
Advertising charged to branch but not yet recorded on branch books 600
Merchandise in transit to branch but not yet shown on branch books4,400
Collection of home office account by branch not yet recorded by home office____750_______
P77,900P61,450
Deductions:
Overstatement of branch profit for 20x0 on home office books540
Cash in transit to home office but not yet shown on home office books16,000
Overstatement of charge for merchandise from home office on branch books (home office shipped 200 units @ P37.85, or P7,570, and 200 units @ P44,95, or P8,990, a total of P16,560; branch erroneously recorded shipment at P16,650, an overstatement of P90__________90
Corrected balancesP 61360P 61,360
2.Home office books:
Jan. 31 Retained Earnings540
Wilshire Branch540
31 Cash in Transit16,000
Wilshire Branch16,000
31 Wilshire Branch750
Accounts Receivable750
Branch Books:
Jan. 31 Advertising Expense600
Home Office600
31 Shipments from Home Office In Transit4,400
Home Office4,400
31 Home Office90
Shipments from Home Office90
Problem VII1.
Branch AccountHome Office Account
Balances before adjustmentsP 59,365P 57,525
Adjustments:
Additions:
Corrected branch income for January (P1,440 P215)1,225
Understatement of branch paid by home office for December 310
Expenses of branch paid by home office ___________215
P 60,900P 57,740
Deductions:
Collection by home office of branch receivable65
Correction of branch income for January215
Merchandise transferred to Brentwood branch but incorrectly charged by Beverly Hills branch1,400
Merchandise returns to home office in transit840
Uncollectible accounts of branch__1,200_______
Corrected BalancesP 57,460P 57,460
2. (a) Entries to bring branch books up to date:
Correction in Income of Prior Periods215
Home Office 215
Home Office215
Income Summary215
Home Office65
Accounts Receivable65
(b) Entries to bring home office books up to date:
Beverly Hills Branch1,225
Beverly Hills Branch Income1,225
Beverly Hills Branch310
Retained Earnings310
Shipments to Beverly Hills Branch1,400
Beverly Hills Branch1,400
Brentwood Branch1,400
Shipments to Brentwood Branch1,400
Merchandise Returns from Branch In Transit Beverly Hills Branch840
Beverly Hills Branch840
Allowance for Doubtful Accounts Beverly Hills Branch1,200
Beverly Hills Branch1,200
Problem VIII1.
Home Office
(b) Mdse. allowance by home office350.00(a) Charge for office furniture by home office 780.00
(f) Truck repairs charged by home office 293.00(d) Charge for labor by home office 866.00
(e) Charge for freight by home office78.50
(h) Proceeds from sale of truck475.00
643.002,199.50
Net credit Total1,556.50_______
1,229.502,199.50
Branch
(a) Purchase of office furniture for branch870.00(b) Mdse. allowance for branch300.00
(c) Branch charge for interest325.00(g) Proceeds from sale of truck475.00
(d) Branch charge for labor 433.00
(e) Branch charge for freight _785.00______
2,413.00775.00
_______Net Debit Total1,638,000
2,413.00_2,413.00
Balance in branch account per home office book, September 30, 20x2P 131,690.00
Deduct net debit total per home office books for transactions that involve discrepancies1,638.00
P 130,052.00
Add net credit total per branch books for transaction that involve discrepancies __1,556.50
Balance in home office account per branch books, September 30, 20x2P 131,608.50
2.
Balance in home office account per branch books, September 30, 20x2P 131,608.50
Add: (a) Failure by branch to take up full furniture chargesP 90.00
(b) Recognition by branch of excess merchandise allowance 50.00
(c) Failure by branch to recognize charge by home office for interest 325
(e) Failure by branch to recognize full freight charges 706.50
(f) Truck repairs charge to home office account in error 293.00___1,464.50
P 133,073.00
Deduct: (d) Recognition by branch of excess labor charges 433.00
(h) Credit entry to home office made in error on sale of truck__475.00___908.00
Corrected interoffice balance, September 30, 20x2P 132,265.00
3.
Balance in branch account per home office books,
September 30, 20x2P 131,690.00
Add credit to branch account made in error for proceeds from sale of truck_____475.00
Corrected interoffice balance, September 30, 20x2P 132,265.00
4.
Office Furniture90.00
Merchandise allowances 50.00
Home office interest charges payable 250.00
Interest expense 75.00
Freight In706.50
Repairs on truck293.00
Labor 433.00
Trucks 475.00
Home Office 556.50
Multiple Choice Problem
1. d
Branch ABranch B
Assets:
Inventory, January 1P 21,000P 19,000
Imprest branch fund2,0001,500
Accounts receivable, January 155,00043,500
Total AssetsP 78,000P 64,000
Less: Liabilities-0--0-
Home Office Current AccountP 78,000P 64,000
2. b
Branch ABranch B
Assets:
Inventory, December 31P 19,000P 12,000
Imprest branch fund2,0001,500
Accounts receivable, December 3170,00053,500
Total AssetsP 91,000P 67,000
Less: Liabilities-0--0-
Home Office Current AccountP 91,000P 67,000
3. d incidentally, the entry in the books of the branch would be as follows:
Profit and loss summary xxx
Home Office Current. Xxx
4. c
January 1,20x4January 1, 20x5
Assets:
InventoryP 37,000P 41,000
Petty cash fund3,0003,000
Accounts receivable43,00049,000
Total AssetsP 83,000P 93,000
Less: Liabilities_____-0-_____-0-
Home Office Current AccountP 83,000P 93,000
5. a refer to No. 4 for computations
6. a
Sales
P 74,000
Less: Cost of goods sold:
SFHO P67,680
Less: Inventory, ending 9,180 58,500 Gross profit P 15,500
Less: Expenses
6,820 Net Loss.. P 8,680 7. aJanuary 1, 20x6
Assets:
CashP 4,200
Inventory9,180
Accounts receivable12,800
Total AssetsP 26,180
Less: Liabilities_____-0-
Home Office Current AccountP 26,180
8. a nominal accounts have zero beginning balance.
9. dBranch CurrentH. Office Current
Unadjusted balance, 6/30/20x4P 225,770P 226,485*
Add (Deduct): Adjustments
1 Erroneous recording of branch equipment3150
2. Insurance premium recorded twice ( 675)
3. Erroneous recording of freight ( 90)
4. Discount on merchandise ( 800)
5. Failure by the branch to record share in advertising700
6. error by the home office to record remittance of Cebu 3,000 ________
Adjusted balance, 6/30/20x4P 228,770P 228,770
* The P226,485 is compute simply by working back with P228,770 adjusted balance as the starting point.
10. c
Home Office Books
(Branch Current- Dr. balance)Branch Books
(Home Office Current Cr. balance)
Unadjusted balanceP518,575P452,276
Add (deduct) adjustments:
In transit10,500
Remittance( 17,000)
Returns( 775)
Cash in transit25,000
Expenses - HO Expenses branch
Error( 800)
________12,000
_____224
Adjusted balanceP 500,000P 500,000
11. d
Home Office Books
(Branch Current- Dr. balance)Branch Books
(Home Office Current Cr. balance)
Unadjusted balanceP515,000P495,750
Add (deduct) adjustments:
Excess freight( 750)
Cash in transit( 11,000)
Returns( 4,000)
Expenses branch ________5,000
Adjusted balanceP 500,000P 500,000
12. c refer to No. 11 for computations13. a refer to No. 11 for computations14. d refer to No. 11 for computations
15. d - No entry should be made in the books of the home office, since the freight should be chargeable to the branch and the payment of the freight was made by the branch.
16. a
Home Office Books
(Branch Current- Dr. balance)Branch Books
(Home Office Current Cr. balance)
Unadjusted balanceP85,000P33,500
Add (deduct) adjustments:
Collection of branch receiv( 9,000)
Shipments in transit24,000
Purchase by branch of office
equipment( 14,500)
Remittance ( 22,000)_________
Adjusted balanceP 48,500P 48,500
17. bHome Office Books
(Branch Current- Dr. balance)Branch Books
(Home Office Current Cr. balance)
Unadjusted balanceP590,000P506,700
Add (deduct) adjustments:
Remittance(40,000)
Returns(15,000)
Error by the branch300
Expenses branch
________28,000
Adjusted balanceP 535,000P 535,000
18. c
Home Office Books
(Branch Current- Dr. balance)Branch Books
(Home Office Current Cr. balance)
Unadjusted balanceP150,000P117,420
Add (deduct) adjustments:
In transit37,500
HO A/R collected by br.10,500
Supplies returned( 4,500)
Error in recording Br. NI( 1,080)
Cash sent to branch
to General Expense by HO25,00025,000
Adjusted balanceP 179,920P 179,920
19. d refer to No. 18 for computation.20. a
Home Office Books
(Branch Current- Dr. balance)Branch Books
(Home Office Current Cr. balance)
Unadjusted balanceP40,000P31,100
Add (deduct) adjustments:
In transit5,800
HO A/R collected by br.500
Cash in transit2,0002,000
Error in recording Br. NI( 3,600)_______
Adjusted balanceP38,900P38,900
21. a refer to No. 20 for computations
22. a
Home Office Books
(Branch Current- Dr. balance)Branch Books
(Home Office Current Cr. balance)
Unadjusted balanceP49,600P44,00
Add (deduct) adjustments:
Collection of branch A/R( 800)
In transit3,200
Purchase of furniture( 1,200)
Return of excess merchandise( 1,500)
Remittance( 500)_______
Adjusted balanceP46,400P46,400
23. b refer to No. 22 for computations
24. (C)
Sales (P350,000 + P100,000).P 450,000
Less: Cost of goods sold:
Purchases (P400,000 + P50,000). P 450,000
Less: Inventory, ending 90,000 360,000 Gross profit P 90,000
Less: Expenses
Salaries and commission.. P 70,000
Rent 20,000
Advertising supplies (P10,000 P6,000) 4,000
Other expenses. 5,000 99,000 Net Loss.. P( 9,000)25. aIn adopting the imprest system for the agency working fund, the home office writes a check to the agency for the amount of the fund. Establishment of the fund is recorded on the home office books by a debit to the Agency working fund and credit cash. The agency will request fund replenishment whenever the fund runs low and at the end of each fiscal period. Such a request is normally accomplished by an itemized and authenticated statement of disbursements and the paid vouchers. Upon sending the agency a check in replenishment of the fund, the home office debits expense or other accounts for which disbursements from the fund were reported and credits cash.26. d
Normally, transactions of the agency are recorded in the books of the home office separately identified with the appropriate agency.
Quiz- XII 1. P78,000Branch ABranch B
Assets:
Inventory, January 1P 21,000P 19,000
Imprest branch fund2,0001,500
Accounts receivable, January 155,00043,500
Total AssetsP 78,000P 64,000
Less: Liabilities_____-0-_____-0-
Home Office Current AccountP 78,000P 64,000
2. P64,000 refer to No. 1
3. P10,416
Sales .
P 80,000
Less: Cost of goods sold:
Purchases... P 25,000
Shipments from home office 56,216
Less: Inventory, ending (P3,391 + P7,625). 11,016 70,200 Gross profit P 9,800
Add (deduct): Expenses.. ( 7,500)
Interest expense. ( 684)
Gain on sale... 8,800 Net Income.. P 10,416 4. P31,416 = P21,000 + P10,416 5. Zero, since it is a nominal account 6. P117,420Home Office Books
(Branch Current- Dr. balance)Branch Books
(Home Office Current Cr. balance)
Unadjusted balanceP150,000P117,420
Add (deduct) adjustments:
In transit37,500
HO A/R collected by br.10,500
Supplies returned( 4,500)
Error in recording Br. NI( 1,080)
Cash sent to branch
to General Expense by HO25,00025,000
Adjusted balanceP 179,920P 179,920
7. P179,920 - refer to No. 6 for computation. 8. c
9. a 10. P7,100SalesP17,600
Less: Cost of goods sold10,500
Gross profitP 7,100
Less: Expenses
Salaries and commission [P1,750 + (5% x (P17,600 P10,000)P 2,130
Rent expense800
Advertising expense325
Samples expense [(P5,000 P2,000) x 1/6]500
Advertising materials expense (3/5 x P1,250)750
Depreciati0n expense [(P2,400 / 5 years) x 1/12]40
Miscellaneous expense___600__5,145
Net incomeP 1,955
11. P5,145 refer to No. 1012. P1,955 refer to No. 10Theories
1.decentralized11.False21.False31.E41.A
2.Home Office Current12.False22.True32.B42.C
3.Branch Income13.False23.True33.c43.B
4.Home Office14.True24.True34. d44. D
5.intracompany15.True25.False35.A45.D
6.True16.False26.C36.C46.C
7.True17.True27.A37.A47.B
8.False18.False28.A38.B48.B
9.False19.True29.D39.B49.C
10,True20.True30.A40.B50.C
51.C
52.D
P2-07