398. ee a z 9 Pincha red aio lt ieee oe Ww od aod 3h i 4 a 5 29 Be me 2d BO Ee 3b i ¢ me B 6 HF Ms a do 14 d 2 a 3h C 4 dS. Sa 15 d 2 b 35 Db an sg & b 16 d 2% b 36 bd e B: ges 7 bo 1. gd wd % C SS cd | Be a 8 b 1 b @ ao B® J Ya q 2 d 9% ao wd BR a 4 | 1. 8d 2 b 3. a 0 d %. ‘MULTIPLE CHOICE PROBLEMS - ANSWERS EXPLAINED 1 (¢) 18) Net exo ot he rench Piank Less: Cosi of goods sold oe iments fom home office 120.000 Less: Inventory. December 31 30.000 __90.009 Gross prot P 22.500 Less: Expenses... 8.100 Net Income P 14.400 (e} (2) Branch Curent Account, 12/31/20x6: National Home Company Curent before Net income of the branch P 90,000 ‘Add: Net income of the branch ai reporied 14.400 Notional Home Company Current/éranch ‘Current - 104,400 (c) In the absence of any errors or reconciling item or when transactions between the home office and the branch are properly recorded, it is expected that ine Feciprocal account, home office and branch account are of the same amount fo) Accounts Receivable, 12/31/20K5 ... ‘Add: Sales on account Total Less: Soles returns - P 4,800, Accotnis Receivable willen-otf... wenn... 2,000 ‘Accounts Receivable, 12/31/20x6 88,800 Collections remitted to Home Office P. 85,200 272700 387,900 95,600 262,300 (a)yr I 4. hments rom home office (P120,000 + PS0.000 + P3500) einen 205,000 as tenner 3050 1s rom home office (NEF OF FEHUMS) a ossnansnoee 201,950 erento. 2 . : 85,000 (1 90008 5015 Ot DHE PCE nnn 7116950 cot 1 Srronce Ot TAK-UD cluded inthe cost of goods sole ess A realized Prof from Branch sales (P116 950 x 25/125) 23,390 cost of goed #014 made by branch P 93.560 (0) 4. (9) 9 office Curent Account before bronch Home et INCOME wn 48,125 .g.net income of ihe branch os repored: 700 oles a - 203.500 less: Cost of goods sola ‘Shipments fom home OCC nue P186,120 . less Inventory, 12/31 25245 _140.875 422s ae 18755 _23870 1e office Current Account/Branch Cunent, 12/3) peter to No. 1 for discussion. + he srepacton of cbined income solemn! of home ofice end bench, of M Meonpany Wonscclons should Be elmnoted es thas never escunee, melo, esa rantaction hat shoud remain are Fonsochons fo snelsied tontoree re, '7280.000 sales by branch to outsider. ) eon. Jonuary 1 ec ta PS 136 Shipments trom office. net of retums {840,000 ~ P48,000) 792,000 Cost of goods avattoble for sole. 825,600 Nutipied by: Mark-up... ea 20/120 ‘Alowance for overvaluation before adustments. 137.600 (b} 7 (o) Inventory, Decembe” 31, 20x in the Combined Balonce Shee! (at cos!) BENCH: P1OB.029 X TOON 20 nn 90,000 Home Otfice: (P160,500 ~ P10,300) 150,000, Inventory, 12/31/2016 at cos 240.000 (b)400 8 %. 10. (b) COSt of goods sold at c paren seo cot all "2280500 ‘Ad8 Shismont tom nom lice a. tay Purchases — 820.000 Cost of goods avaitable for sale eee 5,740,000 Less: Ending Inventory : “+ 2.920.009 Cort of goods ott wih intercompany Pot moons 2820.00 Less: Realized profit trom soles made by branch/ =— overvaivation of cost of goods sold eratoot Mlowance fr orereuaton Belt OS - Less" Alowance Tor ending invent 2 340,000 x 20/120 sews 390,000 __ 356,000 oy COS! Of goods s01d at COS! " . £2470.000 (a) Net income (lois) per branch Books... “ - P(2.270) ‘Add! Realized profit om soles made by branch Overvalyation of cost of goods Sold Beginning inventory wae vassse nn ‘Add! Shipments tess: Retums : Cost of goods ovaiobie fr sale at biled ce. Less: Ending inventory, at billed price Cost of goods sold at billed price Multiplied by: Mark-up 120 Adjusted branch net income ssrmnesne ” F 1,960 (a (9) Salles (250,000 + P80,000) ~- sncssnsen 330,000 Less: Cosi of goods so. a cot esha Shipments rom ome OMNC@ . . Less: Ending inventory... Cost of goods sold at billed pice ennnsnne Muttiplied by: Cost ratio. : - Gross profit : Less: Operating expenses Net income of the branch in so far os the home office in CONCEMMED eensnnenensnnonsnnnn 115,000, 100/115 (9) Sales . 2 Less: Cosi of goods sold: Shioments from home office, at cost (482,000 x 100/140) Less: Ending inventory. at Cost (P138,600 x 100/140) 330,000, 99,000 _ 231,000 Gross profit 138,600 Less: Expenses Real Net Income of the Branch...