HOME OFFICE Bran
1 IIB 60,000 Cash
Cash
2 Investment in Branch 210000 Shipments from HO
Shipments to Branch 140,000
(14,000 *10)
AOI 70,000
based on assumption 3
Shipment Expense 7,000 WALANG GAGAWIN SI BRA
Cash 7,000
case 2.1
WHAT IF ICCARRY NI BRANCH ANG SHIPMENT
IIB 217,000 Shipment from HO
SHIPMENT TO BRANCH 140000 Freight-in
AOI 70000
CASH 7000
PARANGFREIGHT IN OPEX
POV OF BRANCH^
3 BRANCH BOUGHT F&F WORTH 45,000 DEPRECIATION OF 5 YEARS
F&F
4 RETURNED SOME MERCH TO THE HO (PARANG PURCHASE RETURN)
Return of SIB 20,000 Home Office
Allowance for Overvaluation of Inventor 10,000
Opex 2,000
Investment in Branch 32,000
5 SOLD 8500 CHIPS AT A MARKUP OF 125% ON CREDIT
Accounts Receivable
6 COLLECTION
Cash
7 OPEX
8 BRANCH PAID HO ACCOUNTS PAYABLE
Accounts Payable 10,000 Home Office
IIB 10,000
9 18,000 OPEX ALLOCATION FROM THE HOME OFFICE since unfair if the ho will carry the
Investment in Br 18,000 OPEX
OPEX 18,000
EXAMPLE B THERE MAY BE ENTRIES THAT EITHER OF THEM FORGOT TO RECORD - CAUS
Branch
60,000
Home Office
Shipments from HO 210000
Home Office 210000
WALANG GAGAWIN SI BRANCH- NO RECORD FOR SHIPMENT SINCE HO WILL MAINTAIN THIS RECORD)
Shipment from HO 210,000
7,000 no difference with income effect whether branch or ho
Home Office 217,000
7000 ANOTHER FACT - TO TRANSFER - SINCE AVOIDABLE COST SIYA A
COGS 7000 SINCE HO TO BRANCH LANG
45000
Payable 45000
Home Office 32,000
reutrn of sfho 30000 2,000*10*150%
at cost+markup dapat
Cash 2000
Accounts Receivable 286875
Sales 286875 (8500*10*150%*225%) if perpetual, record cogs invty at cost
100,000
AR 100,000
55,000
Cash 55,000
Home Office 10,000 una ang AP tapos cash, tapos figure out the remainng
Cash 10,000
air if the ho will carry the entire burden
18,000
Home Office 18,000
RGOT TO RECORD - CAUSING IMBALANCE IN THEIR ENDING AMOUNTS
RECORD)
whether branch or ho maintains, same expense amount
VOIDABLE COST SIYA AND NOT NORMAL FREIGHT IN
ord cogs invty at cost (remove *225%)
ure out the remainng accounts
Example B
Investment in Branch Home Office
₱ 283,000.00 ₱ 175,000.00 1
-₱ 25,000.00 ₱ 75,000.00
-₱ 23,000.00 -₱ 10,000.00
₱ 13,000.00 ₱ 8,000.00 2
₱ 248,000.00 ₱ 248,000.00
6
Di nagawa ni Home Office Di nagawa ni Branch
SFHO 75,000 (since 50,000 + markup of 50%)
HO
Receivable 25,000 TAMA LANG NA WALANG ENTRY
IIB SINCE ESSENTIALLY NO GOODS
HO
AR
Cash 23,000
IIB 23,000
di ginawa since not reflected on the bank statement
IIB 13000
AR 13000
OPEX
Home Office 8000
Working Paper Eliminating Entries
Entries needed into creating the consolidated financial statements
SEE EXERCISE FILE PDF FOR THE ADJUSTMENTS
1 Home Office 248,000
Investment in Branch 248,000
DAPAT BALANCE SILA AND MAG ZERO
2 STB 120,000
AOI 60,000 65,000 yung balance san galing yung 5000
SFHO 180,000
3 AOI 5000
INVENTORY BEGINNING 5000
5 inv,end is 17500 52500 / 150%
inv, end bs 17500
PERPETUAL
1 SAME
2AND 3 AOI
COGS
san galing yung 5000 las tyear na kasali sa ending inventory
4 COGS
INVTY(BS)
= 35000.00 50%
17500
6500
6500 WALANG PAKE ANG EXTERNAL ANG MARKUP
SO NEED TO ELIMINATE
17500 Original Adjusted
17500 WE WANT EVERYTHING AT COST 15,000 10000
180,000 120000
-52500 -35000
142,500 95000
divided 150%
95000
Stark Industries
Working Paper for Combined Financial Statements of Home Office and Sokovia Branch
For Year Ended December 31, 20X7 Closing Entries
Home Office Sokovia Branch
Dr (Cr) Dr (Cr) Branch
Income Statement
Sales (675,000) (191,250) Sales
Inventory, Jan 1, 20X7 140,000 15,000 IS
Purchases 680,000
Shipments to Sokovia (120,000) IS
Shipments from Home Office 180,000 inventory end
Inventory, Dec 31, 20X7 (400,000) (52,500) SFHO
OPEX 164,000 24,000 inv beg
Net Income (Loss) 211,000 24,750 IS
OPEX
Statement of Retained Earnings
Retained Earnings, Jan 1, 2006 (421,000) IS
Net (Income)/ Loss (211,000) (24,750) HO
Dividends Declared 300,000
Retained Earnings, Dec 31, 2006 (332,000)
Balance Sheet
Cash 125,000 93,000
Accounts Receivable 300,000 91,250
Inventories 400,000 52,500
Investment in Sokovia Branch 248,000
Allow for onvervaluation of invty:
Sokovia Branch (65,000)
PPE and F&F 369,000 45,000
Accumulated Depreciation (125,000) (9,000)
Total Assets 1,252,000 272,750
Account Payable (320,000)
Home Office (248,000)
Common Stock (600,000)
Retained Earnings (332,000)
Total Liabilities and SHE (1,252,000)
HO
191250 Sales 675,000
191250 IS 675,000
142,500 IS 300,000
52,500 STB 120000
180,000 INV END 400,000
15000 INV BEG 140,000
purchases 680,000
24000 IS 164,000
24000 OPEX 164000
is 211000
24,750 re 211000
24,750
RE 300000
DIVS 300000
IIB 24,750
Branch Income 24,750
AOI 47500
Branch Income 47500
BI 72,250
IS 72,250
IS 72,250
RE
