BADVAC1X - Quiz 2 Finals

Home Office and Branch Accounting

Required
1.Which of the following generally is not a method of billing merchandise
shipments by a home office to a branch?Required to answer. Single choice.
(1 Point)
Billing at cost
Billing at a percentage below cost
Billing at a percentage above cost
Billing at retail selling prices
2.A branch journal entry debiting Home Office and crediting Cash may be
prepared for: I. The branch’s transmittal of cash to the home office only II. The
branch’s acquisition for cash of plant assets to be carried in the home office
accounting records onlyRequired to answer. Single choice.
(1 Point)
I only
II only
Both I and II
Netiher I nor II
3.A home office’s Allowance for Overvaluation of Inventories: Branch ledger
account, which has a credit balance, is:Required to answer. Single choice.
(1 Point)
An asset valuation account
A liability account
An equity account
A revenue account
4.Does a branch use a Shipments from Home Office ledger account for Inventory
under the:Required to answer. Single choice.
(1 Point)
Periodic system, yes; Perpetual system, yes
Periodic system, yes; Perpetual system, no
Periodic system, no; Perpetual system, yes
Periodic system, no; Perpetual system, no
5.A journal entry debiting Cash in Transit and crediting Investment in Branch is
required for:Required to answer. Single choice.
(1 Point)
The home office to record the mailing of a check to the branch early in the accounting period
The branch to record the mailing of a check to the home office early in the accounting period
The home office to record the mailing of a check by the branch on the last day of the accounting
period
The branch to record the mailing of a check to the home office on the last day of the accounting
period
6.For a home office that uses the periodic inventory system of accounting for
shipments of merchandise to the branch, the credit balance of the Shipments to
Branch ledger account is displayed in the home office’s separate:Required to
answer. Single choice.
(1 Point)
Income statement as an offset to Purchases
Balance sheet as an offset to Investment in Branch
Balance sheet as an offset to Inventories
Income statement as revenue
7.If the home office maintains accounts in its general ledger for a branch’s plant
assets, the branch debits its acquisition of office equipment to:Required to
answer. Single choice.
(1 Point)
Home Office
Office Equipment
Payable to Home Office
Office Equipment Carried by Home Office
8.In a working paper for combined financial statements of the home office and
the branch of a business enterprise, an elimination that debits Shipments to
Branch and credits Shipments from Home Office is required under:Required to
answer. Single choice.
(1 Point)
The periodic inventory system only
The perpetual inventory system only
Both the periodic inventory system and the perpetual inventory system
 Neither the periodic inventory system nor the perpetual inventory system
9.The appropriate journal entry (explanation omitted) for the home office to
recognize the branch’s expenditure of $1,000 for equipment to be carried in the
home office accounting records is:Required to answer. Single choice.
(1 Point)
Debit, Equipment P1,000; Credit, Investment in branch, P1,000
Debit, Home Office, P1,000; Credit, Equipment, P1,000
Debit, Investment in branch P1,000; Credit, Cash, P1,000
Debit, Equipment P1,000; Credit, Home Office, P1,000
10.On January 31, 2005, East Branch of Lyle Company, which uses the perpetual
inventory system, prepared the following journal entry: Dr. Inventories in transit
10,000 Cr. Home office 10,000 When the merchandise is received on February 4,
2005, East Branch should:Required to answer. Single choice.
(1 Point)
Prepare no journal entry
Debit Inventories and credit Home Office, $10,000
Debit Home Office and credit Inventories in Transit, $10,000
Debit Inventories and credit Inventories in Transit, $10,000
11.If a home office bills merchandise shipments to the branch at a markup of 20%
on cost, the markup on billed price is:Required to answer. Single choice.
(1 Point)
16 2/3 %
20%
25%
Some other percentage
12.The appropriate journal entry (explanation omitted) in the accounting records
of the home office to record a P10,000 cash remittance in transit from the branch
at the end of an accounting period is:Required to answer. Single choice.
(1 Point)
Debit, Cash, P10,000; Credit, Cash in transit, P10,000
Debit, Cash in transit, P10,000; Credit, Investment in branch, P10,000
Debit, Cash, P10,000; Credit, Home Office, P10,000
Debit, Cash in transit, P10,000; Credit, Cash, P10,000
13.Selected balances from the Cebu Company’s Branch A and B are as follows:
Accounts Branch A Branch B Inventory, 1/1/20x4 P21,000 P19,000 Imprest Branch
Fund 2,000 1,500 Inventory, 12/31/20x4 19,000 12,000 Accts receivable, 1/1/20x4
55,000 43,500 Merchandise from HO 61,000 47,000 Accts receivable, 12/31/20x4
70,000 53,500 Sales 100,000 80,000 Cash expenses 21,000 14,300 All sales,
collections, and expenses are handled at the branch. All cash received from sales
and collections are sent directly to the Home Office. Expenses are paid by the
branch from the imprest fund and immediately reimbursed by the Home Office
and credited to the Home office account. All expenses paid the branch are
recorded in the books of branch. Compute the balance of the Home Office
account in the books of Branch on January 1, 20x4Required to answer. Single
choice.
(1 Point)
Branch A, P163,000; Branch B, P67,000
Branch A, P64,000; Branch B, P78,000
Branch A, P139,000; Branch B, P111,000
Branch A, P78,000; Branch B, P64,000
14.Selected balances from the Cebu Company’s Branch A and B are as follows:
Accounts Branch A Branch B Inventory, 1/1/20x4 P21,000 P19,000 Imprest Branch
Fund 2,000 1,500 Inventory, 12/31/20x4 19,000 12,000 Accts receivable, 1/1/20x4
55,000 43,500 Merchandise from HO 61,000 47,000 Accts receivable, 12/31/20x4
70,000 53,500 Sales 100,000 80,000 Cash expenses 21,000 14,300 All sales,
collections, and expenses are handled at the branch. All cash received from sales
and collections are sent directly to the Home Office. Expenses are paid by the
branch from the imprest fund and immediately reimbursed by the Home Office
and credited to the Home office account. All expenses paid the branch are
recorded in the books of branch. Compute the balance of the Home Office
account on December 31, 20x4Required to answer. Single choice.
(1 Point)
Branch A, P110,000; Branch B, P152,000
Branch A, P91,000; Branch B, P67,000
Branch A, P64,000; Branch B, P78,000
Branch A, P78,000; Branch B, P64,000
15.Selected balances from the Cebu Company’s Branch A and B are as follows:
Accounts Branch A Branch B Inventory, 1/1/20x4 P21,000 P19,000 Imprest Branch
Fund 2,000 1,500 Inventory, 12/31/20x4 19,000 12,000 Accts receivable, 1/1/20x4
55,000 43,500 Merchandise from HO 61,000 47,000 Accts receivable, 12/31/20x4
70,000 53,500 Sales 100,000 80,000 Cash expenses 21,000 14,300 All sales,
collections, and expenses are handled at the branch. All cash received from sales
and collections are sent directly to the Home Office. Expenses are paid by the
branch from the imprest fund and immediately reimbursed by the Home Office
and credited to the Home office account. All expenses paid the branch are
recorded in the books of branch. The entry in Branch B’s records in order to
update the reciprocal Home Office account on December 31, 20x4 assuming net
income of the branch is being reported to the home office:Required to answer.
Single choice.
(1 Point)
Debit, Home Office - Current; Credit, Profit or Loss
Debit, Profit or Loss; Credit, Branch Current
Debit, Branch - Current; Credit, Profit or Loss
Debit, Profit or Loss; Credit, Home Office
16.On December 31, 20x4, the branch manager of Beta Company in the Ilocos
Region submitted the following data to the home office in Manila Petty cash fund
P3,000 Accounts receivable written off 1,500 Sales 195,000 Inventory, 1/1/20x4
37,000 Shipments from home office 135,000 Inventory, 12/31/20x4 41,000
Account receivable – 1/1/20x4 43,000 Expenses (charged by Home Office) 50,000
Account receivable – 12/31/20x4 49,000 All cash collected on accounts receivable
are remitted to the home office The balance of the Home Office Current account
on January 1, 20x4 isRequired to answer. Single choice.
(1 Point)
P72,800
P84,500
P83,000
None of the above
17.On December 31, 20x4, the branch manager of Beta Company in the Ilocos
Region submitted the following data to the home office in Manila Petty cash fund
P3,000 Accounts receivable written off 1,500 Sales 195,000 Inventory, 1/1/20x4
37,000 Shipments from home office 135,000 Inventory, 12/31/20x4 41,000
Account receivable – 1/1/20x4 43,000 Expenses (charged by Home Office) 50,000
Account receivable – 12/31/20x4 49,000 All cash collected on accounts receivable
are remitted to the home office On January 1, 20x5, the Branch Current account
on the home office books would show a balance ofRequired to answer. Single
choice.
(1 Point)
P93,000
P43,000
P95,500
None of the above
18.Philippine Overseas Corporation has operated a branch in Jordan for one year.
Shipments are billed to the branch at cost. The branch carries its own accounts
receivable, makes its own collections, and pays its own expenses. The transactions
for the year are given effect to in the trial balance below: Accounts Debit Credit
Cash P4,200 Home Office Current P17,500 Shipments from Home Office67,680
Accounts receivable 12,800 Expenses 6,820 Sales 74,000 Totals P91,500 P91,500
The branch reported an inventory on December 31, 20x5 of P9,180 The net profit
of the Jordan Branch for 20x5 wasRequired to answer. Single choice.
(1 Point)
P8,680
P9,180
P67,180
Some other answer
19.Philippine Overseas Corporation has operated a branch in Jordan for one year.
Shipments are billed to the branch at cost. The branch carries its own accounts
receivable, makes its own collections, and pays its own expenses. The transactions
for the year are given effect to in the trial balance below: Accounts Debit Credit
Cash P4,200 Home Office Current P17,500 Shipments from Home Office67,680
Accounts receivable 12,800 Expenses 6,820 Sales 74,000 Totals P91,500 P91,500
The branch reported an inventory on December 31, 20x5 of P9,180 On January 1,
20x6, the Branch current account in the Home Office books should have a
balance ofRequired to answer. Single choice.
(1 Point)
P26,180
P26,680
P67,680
Some other answer
20.Philippine Overseas Corporation has operated a branch in Jordan for one year.
Shipments are billed to the branch at cost. The branch carries its own accounts
receivable, makes its own collections, and pays its own expenses. The transactions
for the year are given effect to in the trial balance below: Accounts Debit Credit
Cash P4,200 Home Office Current P17,500 Shipments from Home Office67,680
Accounts receivable 12,800 Expenses 6,820 Sales 74,000 Totals P91,500 P91,500
The branch reported an inventory on December 31, 20x5 of P9,180 On January 1,
20x6, the Shipments to Branch account in the Home Office books should have an
opening balance ofRequired to answer. Single choice.
(1 Point)
Zero
P17,500
P26,180
Some other answer
21.The Petite Branch of Dainty Company submitted trial balance as of December
31, 20x4, after first year of operations Accounts Debit Credit Cash P10,400
Accounts receivable 63,200 Shipments from HO 168,000 Expenses 10,800 Sales
P134,400 Home office current 118,000 Totals P252,400 P252,400 Merchandise
inventory, P50,400 Shipments to the branch are billed at 140% of cost The
overstatement in the Branch inventory at December 31, 20x4 wasRequired to
answer. Single choice.
(1 Point)
P0
P 6,000
P 14,400
P 33,600
22.Pangasinan Branch of Malate Company, at the end of its first quarter
operations, submitted the following income statement Sales P300,000 Cost of
sales: Shipments from HO P280,000 Local purchases 30,000 Total P310,000
Inventory at end 50,000 260,000 Gross profit on sales P40,000 Expenses 35,000
Net income P5,000 Shipments to the branch were billed at 140% of cost. The
branch inventory at September 30 amounted to P50,000 of which P6,600 was
locally purchased. Mark up on local purchases, 20% over cost. Branch expenses
incurred y Home Office amounted to P2,500 not yet recorded by the branch
Compute the branch ending inventory that should be presented in the combined
income statementRequired to answer. Single choice.
(1 Point)
P36,500
P37,600
P43,400
P50,000
23.Pangasinan Branch of Malate Company, at the end of its first quarter
operations, submitted the following income statement Sales P300,000 Cost of
sales: Shipments from HO P280,000 Local purchases 30,000 Total P310,000
Inventory at end 50,000 260,000 Gross profit on sales P40,000 Expenses 35,000
Net income P5,000 Shipments to the branch were billed at 140% of cost. The
branch inventory at September 30 amounted to P50,000 of which P6,600 was
locally purchased. Mark up on local purchases, 20% over cost. Branch expenses
incurred y Home Office amounted to P2,500 not yet recorded by the branch
Compute the true branch net incomeRequired to answer. Single choice.

(1 Point)
P70,100
P5,000
P2,500
None of the above
24.On December 31, 2013, the Investment in Branch account on the home office’s
books has a balance of P85,000. In analyzing the inter-company transactions
recorded in each of these accounts for December, you discover the following
discrepancies • A P10,000 branch remittance to the home office initiated on
December 27, 2013, was recorded on the home office books on January 4, 2014 •
A home office merchandise shipment to the branch on December 29, 2013 was
recorded by the branch on January 5, 2014. The cost of this merchandise is
P20,000 • The home office incurred P12,000 of advertising expenses and
allocated P5,000 of this amount to the branch on December 15, 2013. The branch
has not recorded this transaction • A branch customer erroneously remitted
P3,000 to the home office. The home office recorded this cash collection on
December 23, 2013. Meanwhile, back at the branch, no entry has been made yet.
• Merchandise costing P43,000 was sent to the branch by the home office on
December 10, 2013. The billing was at cost, but the branch recorded the
transaction at P34,000 Compute the following balances as of December 31,
2013Required to answer. Single choice.
(1 Point)
Unadjusted bal - HO account, P44,000; Adjusted bal, P95,000
Unadjusted bal - HO account, P26,000; Adjusted bal, P16,000
Unadjusted bal - HO account, P44,000; Adjusted bal, P75,000
Unadjusted bal - HO account, P44,000; Adjusted bal, P78,000
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