Practical Accounting 2

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Home Office and Branch Accounting

1.Jargon Corporation has been operating a branch in Davao for a 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:

CashP 8,500
Home Office currentP 35,000
Shipments from home office 135,500
Accounts Receivable 25,000
Sales 147,000
Expenses 13,500 _______
P 182,000 P 182,000

The branch inventory on December 31, 2007 is P 18,500

2.On January 1, 2008, the branch current account on the books of the home office should have a balance of:
a. P25, 000b.P18,000c.P52,000d.P35,000

3.On January 1 ,2008, the shipments to branch account of the home office books should have an opening balance of:
a. P135, 000b.P0c.P116,500d.P126,500

On December 31, 2007 the branch manager of Stone Company in the Comval province submitted the following data to the home office in Davao:

Petty cash fundP 3,000
Sales195,000
Shipments from home office135,000
Accounts receivable – January 1, 2007 43,000
Accounts receivable – December 31, 2007 49,000
Accounts Receivable written off 1,500
Inventory - January 1, 2007 37,000
Inventory – December 31, 2007 41,000
Expenses (charged by home office) 50,000
All cash collected on accounts receivable are remitted to the home office:

4.The balance of the home office current account on January 1, 2007 is:
a.P72, 800 b.84, 500c.P83, 000d.P81, 000

5.On January 1,2007, the branch current account on the home office books would show a balance of:
a. P93,000b.P43,000c.P95,500d.P83,500

On December 31, 2007, the branch current account in the general ledger of the home office of Pellobelo Company shows a debit balance of P40,000....
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