Advanced Accounting Vol. 1

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CHAPTER 12

MULTIPLE CHOICE

12-1:d. This is recorded when the working fund is replenished.

12-2:c.

SalesP 700,000
Cost of goods sold:
PurchasesP800,000
Merchandise inventory, end 180,000 620,000
Gross profitP 80,000
Expenses 198,000
Net income (loss)P (118,000)

12-3:b

SalesP 70,000
Cost of goods sold (P70,000 / 140%) 50,000
Gross profitP 20,000
Less: Samples (P8,000 – P6,000)P 2,000
Expenses 2,800 4,800
Net incomeP 15,200

12-4:a

SalesP 100,000
Cost of goods sold 72,000
Gross profitP 28,000
Expenses (P9,000 + P4,500) 13,500
Net incomeP 14,500

12-5:a

12-6:a

12-7:c

12-8 a

Shipment of merchandise to home officeP 80,000
Equipment sent to home office 50,000
Expenses assigned to branch by the home office 8,000 Cash remittance to home office (40,000)
Home office account balanceP 98,000

12-9: d

12-10: a

Home Office account balance before closing, Dec. 32, 1008P 35,000
Net income (loss)
Sales P147,000
Cost of cost goods sold
Shipment to branchP135,000
Inventory, 12/31 18,500 116,500
Gross profit P 30,500
Expenses 13,500 17,000
Home Office account balance (Investment in Branch account balance)P 52,000

Shipment to Branch account has no beginning balance, because this was closed at the end
of 2008.

12-11:b
Jan. 1, 2008Jan. 1, 2009
Petty cash fundP 6,000P 6,000
Accounts receivable 86,000 98,000
Inventory 74,000 82,000
Home Office account balanceP166,000P186,000

12-12:d

(Branch Books) (Home Office Books)
Home Office Investment in Branch
Unadjusted balances, Dec. 31P 21,320P 38,600
Remittance in transit (10,400)
Shipment in transit 7,280
Cash collections of home office ( 400)
Adjusted balances, Dec. 31P 28,200P 28,200

12-13:a

Unadjusted balance – Investment in Branch account, 12/31P430,000
Charge for advances by president (5,500)
Erroneous entry for merchandise allowance ( 600)
Share in advertising expense (9,000)
Unadjusted balance – Home Office account, 12/31P414,900

12-14:a
(Branch Books) (Home Office Books)
Home Office Investment in Branch
Unadjusted balances, 12/31 P 97,350 P 84,000
Shipment in transit 6,150
Collection of HO A/R by branch 25,000
Error in recording of branch profit 900
Returns of merchandise in transit ( 6,400)
Adjusted balances, 12/31 P103,500 P103,500

12-15:a
(Branch Books) (Home Office Books)
Home Office Investment in Branch
Unadjusted balances P25,550P27,350
Error in recording shipment to Cavity branch (12,000)
Error in recording shipment to Tagaytay branch 15,000
Branch AR collected by home office (3,000)
Merchandise returns in transit ( 1,200)
Error in recording branch profit ( 3,600)
Adjusted balancesP23,750P23,750

12-16:c
Unadjusted balance- Investment in Branch accountP 85,000
Remittance in transit (10,000)
Shipment in transit (20,000)
Expenses allocated ( 5,000)
Error in recording remittance 3,000
Error in recording shipments ( 9,000)
Unadjusted balance – Home Office accountP 44,000

( Branch Books) (HomeOffice Books)
Home Office Investment in Branch
Unadjusted balances, P 44,000P 85,000
Remittance in transit (10,000)
Shipment in...
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