ADVANCED ACCOUNTING P-2 HOME OFFICE AND BRANCH ACCOUNTING

1) The Batangas Corporation has a branch in Laguna. Because of the high volume of intercompany transactions, the company has encountered
difficulty
in reconciling its Home office/Branch accounts. Following is a listing of the components of the Branch Balance (from the Home office ledger)
followed
by the Home Office account as recorded by the branch.
BRANCH-LAGUNA HOME OFFICE (FROM FINANCIAL RECORDS OF BRANCH)
Jan.1 Beginning balance 62,000 Jan.1 Beginning balance -35,000
Jan.2 Cash received -16,000 Jan.2 Inventory received -11,000
Mar. 2 Inventory transferred 42,000 Mar.5 Inventory received -42,000
Apr. 1 Salary allocation 9,200 Apr.5 Salary allocation -9,000
Jul. 2 Inventory transferred 36,000 Apr.8 Cash transferred 45,000
Sept.5 Insurance expense allocation 1,000 Jul.6 Inventory received -48,000
Oct. 6 Cash received -21,000 Sept.10 Insurance expense allocation -1,000
Nov.4 Inventory transferred 28,000 Oct.4 Cash transferred 21,000
Dec.31 Depreciation allocation 3,000 Nov.8 Inventory received -28,000
144,20
Balance (debit) 0 Dec.31 Cash transferred 15,000
Balance (credit) -93,000
Additional information:
1) A cash transfer received during the year was credited by the home office to Miscellaneous Income
2) The bookkeeper for the branch incorrectly recorded two amounts: a salary allocation and an inventory shipment.
Required:
1) Determine the correct balance for the Home office/Branch accounts as of December 31
2) Prepare adjusting entries for both books to appropriately record the intercompany transactions.

2) At the end of 2019, the following records were taken from the books of the home office and the branch:
       HOME OFFICE (BRANCH BOOKS)      
Dec.1 Cash remitted to home office 80,000 Jan.1 Balance 60,000
Dec.28 Cash remitted to home office 30,000 Dec.5 Shipments from home office 120,000
 Merchandise returned to home
Dec.28 office 12,000 Dec.28 Expense from home office 45,200
  Balance, P103,200
       INVESTMENT IN BRANCH (HOME OFFICE BOOKS  
Jan.1 Balance 60,000 Dec.3 Cash received from branch 80,000
120,00
Dec. 4 Shipments to branch 0 Dec.28 Collection from branch
Dec.28 Expense allocation 52,400   customer 18,000
Dec.28 Shipments to branch 24,000  
Dec.28 Supplies purchased for branch and  
shipped directly to branch 8,000  
Balance,P166,400  
Except for the error made by the branch in recording its share of allocated expenses, all differences are timing differences.
Required:
1) Compute the correct balances of the reciprocal accounts.
2) Prepare the entries necessary to bring the reciprocal accounts into balance for a working paper to be used to prepare the home office's combined
financial statements.
3) The Traders Company has a branch in Davao. As of Dec.31,2019, the Investment in Branch account showed a balance of P206,344 while the
Home Office account had a balance of P140,974. Summaries of these accounts are as follows:
        INVESTMENT IN BRANCH      
Dec.1 Balance 87,234 Dec.12 Remittances 12,600
7 Shipments to branch 33,440 26 Remittances 22,200
10 Freight on shipment 470  
14 Shipments to branch 54,300  
28 Shipments to branch 57,600  
31 Advertising 4,200  
Rent 3,900  

        HOME OFFICE        
Dec.11 Remittances 12, Dec.1 Balance 87,23
 600 4
23 Remittances 2,200 10 Merchandise from home
office 33,440
31 Remittances 19,200 18 Merchandise from home
  office 54,300
Additional Information:  
1) The freight charged to the branch on Dec.10 was erroneous; it should have been charged to a customer.
2) Advertising and rent charged to the branch on Dec.31 represent allocated portions of H/O expense chargeable to branch
operations
3) Merchandise was billed to the branch at cost.
4) Remittance on Dec.31 was incorrectly recorded by the branch's bookkeeper.
Required:
Prepare reconciliation of current account balances as of 12/31/2019.

4) The reciprocal accounts between the home office of Manila Company and its branch in Makati were adjusted to P134,000 as of beginning of the
year
The transactions between the home office and the branch for 2019 were as follows:
1) Remittance by the branch- P189,000. (P42,000 was still in transit as of
12/31/2019)
2) Shipments to branch (includes goods worth P39,000 that are not yet received by the branch as of 12/31/2019) amounted to P440,000
3) The home office has not informed the branch of its share in the advertising expense amounting to P17,000
4) Accounts receivable of the branch amounting to P25,000 was collected by home office, net of 2% discount. The branch has not yet been notified.
5) The home office incorrectly credited Makati Branch by P12,000 for the remittance of its Pasig Branch. Makati branch made no entry.
6) The home office corrected the above entry (no.5) on Jan.5, 2020. However, the Makati branch inadvertently received a copy of this memo and
entered a credit in favor of the home office as of Dec.31,2019.
7) The branch returned merchandise worth P10,400 to the home office and was duly acknowledged by the latter during the
year.
Required:
1) What is the balance of the HOME OFFICE account in the books of Makati branch on Dec.31,2019
2) Prepare a reconciliation statement to compute the adjusted balances of the reciprocal accounts.