ACCOUNTING 7 Instructions: Choose the most correct answer for each ofthe following questions. Wit the eter of your choice in CAPITAL in the FLRST PAGE OF THE GREEN BOOK PROVIDED. (Questions 1 & Zare based on the following information. (On February 14, 2012, Terese Company establsted a sales agency in Tagblaran. Upon estabichmant of the sles agency, the ome ce sat saps costing PS,C00 and a working Fund of P3,000 to be maintained on the imprest basis. During the six mosths period, the sales agency reported to Lne Home oftce sales orders. These ware id at 770,000 of whic af 40,000 was collected) the sales agency paid expenses of 5,800 but was reimbursed bythe home ofee (On August £5, 2012, the sales agency samples were valued atP2,000 I wes estimates thatthe gross profit on goods signed to fil sales ercer averaged 40% of cost. 4, “The cost of sos of tne sales agancy for the sx months period is 2,742,000, -Pas,c00 . P4300 ‘cpsc.ano 2. The net income or the sas agency forthe sic months perio s| 2.716200, €- 10,200 P1420 paz 3. branch's ending inventory of merchandise shipped by the home office and purchase from outside vendors ‘amounts to P 50,000, The post-cksing tral balance inthe Unrealized Gross Prim Branch Inventory account i P 6,000 cue tothe home ofce practice of shipping merchandise at 20% above cos. The merchandise purchased rom ‘utsde vendors cantaned inthe ending inventory ofthe branch amounts to: a. P38,000 © P30,000 b P18.000 3 B1g.n00Questions 4 and 5 are based on the following information. “The income statemant submited by Loon Branch to the Home Cie fr the month of December 31, 2013 rotons: Sates 600,000 Cost of Sales: Inventory, December 33, 2013 0,000 Shioments from Home office 330,000 Purchased local by branch 30.000 Total aéo,a00 Inventory, December 31, 2013 ‘100.000 360.000 Goss Margin 240,000 Operating Expenses ‘190.000 at Income Tor the month 60.009 “The Branch inventories consisted of: wagon — azar. Merchandise purchases rom home 70,000, 34,000 Local purchases 0-000 P36.000 Total pegooo = pun After effecting the necessary acjustments, the Home Office ascetaines the true net income of the Branch to be 356,000. 4, At what percentage of cost cid the Rome oie ill the Branch for marcnanaiseshigpee to? 2 100% 120% b 2035 6. 150% SS. Whats the balance ofthe Alamance for Overvaluation in the branch iavantary at December 31, 2013? a. 10,000 . P16,000 >. pzaoo . P34,000 Questions 6 and 7 are based on the folowing Information. “The folloing infomation is estractd from the books and recor of Eline Comgany and its brench, The balances ae at December 31, 2012 ofthe company’s operations Home Office Branch Sales 260,000 ‘Shipments to branch 78,000 Shipments from home office 104,000 Purchases 35,000 Expenses 75,000 Inventory, January 1, 2012 25,000 ‘Allowance for overvaluation of branch inventory 31,200 However, ro shipments in transit between home office and the branch were made. Bath shipments accounts are ‘propery recorded, The ending inventory includes merchandise acquired from the home office inthe amount of| 26,000 and P7 800 acquire from cutsicers acquired fram the home office in the amount of P25,000 and P7, 800, quired from outsiders fora total of P33,800, 6. Whats the realized profitin branch inventory? 2. P23,000 ©. P22,533 .P31,200, apa z00 7. Whats the amount of branch merchandise beoinning inventory that was acquired from the home office? a. P14,000 ©. PIS 600 .P13,000, 1.220.800Questions & and 9 are based on the following information. ‘Rute Supply Company is engaged in merchandsing both at its home office in Cebu City and ts branch in Toleds City. Selected aceaunte taken trom the tial Balances of the nome office and the branch ae of December 31, 2012 follow Debits cenu city Toledo Beane Inventory, January 4, 2012 23,000, Po1i,s50 ‘Toledo Branch 58,300 Purenases, 190,000, 105,000 Freight in from heme office 3,509 Sundry Expenses, 52,000 28,000 credits Home Oice 53,300 Sales 155,000 140,000 Allowance for Overvaluction of ranch inventory at ‘January 1, 2012. 1,000 Additional informatan: + Te Toledo City branch gets all ofits merchandise ‘ram the home ofce, The home office bills the goods at cost plus 2 10% mark-up. At December 31, 2012, a shipment wth a biled value of P5,000 wes stl in transit. Freight on this shipment was P250 ands to be treated as part of the inventory. + Tventones on December 31, 2012, excluding the shipment in trans, fellow: Home office, at cost 30,000, Brancn, at bited price (excluding treght of P520. 10,000 8. What isthe net incame of the home office from own operations? 3. P30,470 "21,000 5. P20,000 4. P30,470 9. What isthe net income ofthe branch in se far as the home office is concerned? ».P10,470 4. P12,000 20. Ourabie Textile Company has @ single branch in Bohol. On March 3, 2032, the home office accounting records Included an Allonance for Overvalistion of Inventories — Bohl Branch ledger account weh 2 crecie balance of 32,000. ‘During March, merchandisa costing P36,090 was shipped to the Bohol Branch and billed at 2 price representing a 40% markup on the billed price. Gn March 34, 2012, the branch preparad an income statement indicating a net loss of P11,500 for March and ending inventories at biled prices of P25,000. What is the amount of ‘agjustment for allowance for Overvaluation of Inventories to reflect the true branch net income? 3 P30,257 debe 2. Pg, 733 debit 1 Pa6,000 creat 4, Pa6,000 debit, (Questions 11 and 12 are based on the following information. Yul Trading Corp. operates a branch in Talsay City. At the close of business on December 31, 2012, Talisay Branch account in the home office books showed a debe balance of P225,770. The interaffice accounts were in agreement at the begining of the year. For purposes of reconcling the intesoffice accounts, the following facts were asceriained: 1. An office equipment costing the home office P3,5000 was picked up by the branch as F350. 2. Insurance premium of P675 charge by the hame office was taken up twice by the branch. 3. Freight charges on merchandise made by the home office for Pi,125 were recorded in the branch book as 1,215. 4. Home office creait memo representing a discount on mercnandise for P800 was not recorded by the branch. 5, The branch failed to take up a P700 debt memo from the home office representing the share ofthe branch in the advertising, 6. The home office inadvertently recorded a remittance for P3,000 from tne Cebu branch as a remittance from its Talisay branch. 1L. What isthe balance of the Home Office account before adjustment as of December 31, 2012? 1. P225,000 < P228,485 b. 225,770 226.485 12. What isthe adjusted balance of the Home Office account as of December 31, 2012? a. P225,000 225,770 b. 226,485 228.2770Questions 13 and 14 are based on the following information. PTT Corporation retals marchanasse through its home office store are through a branch store in a cistant city. Separate ledgers ire maintained by the home affice and the branch. the branch store, purchases merchandise fram the hare Sine (at 120% of home bifice cont), aa ves from cutaiie mapptes’ Selects iferination trary the December 212032 Purchases 75,000 11,000 Inventory, January 1, 2012 40.000 305000 Expenses 28,000 zi Unrealized profit in branch inventory 7200 208 ‘The Ducember 31, 2012 nventories are P40,000 and P20,000 for the home office and the branch, respectively. (the branch purchased 16% of ts ending Inventory trom ouside supplies) Ere begining ad ending wontonce ade mertndies este! orm Nore fic inventor a 320% 89200 200 ‘2. P50,200 i P10,600 & PSsfo00 a “ia0 ‘Questions 15 and 16 are based on the following information. Rules Corporation has one branch operaticn cated 500 mies aviey from the home ofTice. The branch office sales merchandise whieh i shipped to Itfrom tne home ofce. The merchandise ls ransferred at cost but the branch pays Feaconable freight charges. The branch office makes sales and incurs and pays operating expenses. At the end of the Current accounting pera the true adjusted balance for the Rome office account on the branch's bOOkS anc the Branch bfice account on the home office's Books 16 390,000, “Tne fallowing items may ar may not be reconcting ems. The current year I 2012. 7) ime home office has shipped merchandise to the branch olfice which cost PL0,000 and which incurs P00 freight charges nad by the home office but charged to tne branch. This merchandise is raceived By the: branch on January 5, 2012. 2) The branch nas transmitted P17,000 in cash back to the home office as a partial payment on such purchased Imerchancise. This cash Is received by the home office on January 6, 2017 3) Tre branch orice returns Some detective merchandise to the home office. The cost oF te returned metchanciae e750, The xnnch otic pays P23 ot Tight cose whch wil ie Charged ack othe Neme 14) On December 1, 2012, the home office sends a check for P25,000 to replenish the branch's charged back to the home office. 5) The branch pays an advertising expense of P8OO that should have been pai by the home office since it applied to advertising fees incurred by the home office of its own benefit, 6) The home office allocated P12,000 of general and administrative expenses to the branch, The branch had not entered the allocation as of the end ofthe year. 7) The home office pays insurance premiums on the branch store. The amount paid by the home office is 1,000 but the branch erroneously records it as 776.00, 415. What Is the unadjusted balance of the Home Office account? i Pa8I,425 c. PS00,000 b. 452.276 a 518,575 46. What isthe unadjusted balance of the Branch account? 2 P433,701, . Psis.s75 b. 500,000 d. 452,276Questions 17 through 20 are based on the following information. Purchace (outsidars) 35,000 $200, ‘Branch (9.500 from heme office end P2,500 from outsiders) 36,000 B12896 ot cost 5. 2388 Or cose 28. How much cf the Bacember 1 inventory ofthe branch represent purchanes em outsiders and goods shipped fom f Home effice, £5,000 and Outsiders, P10,000, Home office, £8,000 anc Qutsiars. 27.000 aba s00 P2500 Bb2eie09 5. Pai.s00 ‘The entry to adjust the branch income in the books of the home office wil include 3. Debt te Allowance for ovarvaluabon of branch invarsery P12,600 Gost Honever May's hame office ships merchandise to tne branches at casi. Rose's encing inventory eludes £520,000 of merchandise resewed from home oftice Rose branch remitted P15,000 to home office on December 30, 2012. The Home office will not receive the remittance until January 4, 2013. The Home office allocated P5,000 general expenses to each of the branches but Rose branch have not yet recorded the expenses at year-end) Rose branch paid P2,000 for advertising “after Christmas” sales that were to be allocated equally between the two stores. The Home office has nat recorded its share in the expenses. The unadjusted balance of the Home office account in the books of Rose branch is a. 324,000 .P323,000 n.2319.000 <.P318,000 Questions 23 & 24 are based on the following information. Si'Seeene ot 20.5 tne home Sie Seuount th the Sraneh Books shows 9 bolance of F9,725. The folowing The bran 30. but falas to nouly the home offies of this 23. The unadjusted balance of Branch account is 24, The acjusting entry to correct branch nat income for November is 2" Debt, Urareh profit ana loss POO and Creat, Branch account PSO . S s Branch prot and loss Debt. Grarch pront and tose PDO and Create, Home office account POO