solution chapter 12 advanced accounting ii 2014 by dayag

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


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.


For Year Ended December 31, 20x4

Assets

Liabilities & Stockholders Equity

Cash ..

P 23,200

Liabilities


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.


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


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


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


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.


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.



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


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


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


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


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


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


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


Accounts receivable, December 3170,00053,500


Less: Liabilities-0--0-


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


Less: Liabilities_____-0-_____-0-


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





Excess freight( 750)

Cash in transit( 11,000)

Returns( 4,000)

Expenses branch ________5,000


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





Collection of branch receiv( 9,000)

Shipments in transit24,000

Purchase by branch of office

equipment( 14,500)

Remittance ( 22,000)_________


17. bHome Office Books





Remittance(40,000)

Returns(15,000)

Error by the branch300

Expenses branch

________28,000


18. c

Home Office Books





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


19. d refer to No. 18 for computation.20. a

Home Office Books





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





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


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


Accounts receivable, January 155,00043,500


Less: Liabilities_____-0-_____-0-


2. P64,000 refer to No. 1

3. P10,416

Sales .

P 80,000


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





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


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

solution chapter 12 advanced accounting ii 2014 by dayag

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