a. Working Fund - Agency 5000 Cash 5000 b. Accounts Receivable 50000 Sales - Agency 50000 c. Cash 35000 Accounts Receivable 35000 d. Salaries expense - Agency 4500 Cash 4500 e. Utilities expense - Agency 2250 Cash 2250 f. Cost of goos sold - Agency 36000 Shipments to Agency 36000 Required 2: DETERMINE THE NET INCOME IDENTIFIED WITH THE AGENCY Sales 50000 Less: Cost of Goods Sold 36000 Gross Profit 14000 Less: Expenses Salaries Expense 4500 Utilities Expense 2250 6750 NET INCOME 7250 HOME OFFICE RECIPROCAL ACCOUNTS NONCURRENT ASSET a. Transfer of cash to Branch xx xx c. Shipment returns from Branch b. Shipment to Branch xx e. Depreciable assets acquired d. Expense incurred by Branch xx and will be used by the Branch but paid by Home Office xx xx f. Cash remittance by the Branch BALANCE xx xx BALANCE UNADJUSTED BALANCE XX g. Depreciation charged to Branch xx i. Adjusting items/reconciling items (if any) xx xx k. Adjusting items/reconciling items (if any) xx xx (balance before closing entries) ADJUSTED BALANCE XX h. PROFIT from Branch operation (if any) xx xx j. LOSSES from Branch operation (if any) Branch current balance after closing entries XX PROBLEM 2 Home office a. Transfer of cash to Branch 42500 0 c. Shipment returns from Branch b. Shipment to Branch 50200 e. Depreciable assets acquired d. Expense incurred by Branch 8000 and will be used by the Branch but paid by Home Office 0 53400 f. Cash remittance by the Branch BALANCE 92700 61400 BALANCE UNADJUSTED BALANCE 31300 g. Depreciation charged to Branch 650 i. Adjusting items/reconciling items (if any) 0 0 k. Adjusting items/reconciling items (if any) 650 0 (balance before closing entries) ADJUSTED BALANCE 31950 h. PROFIT from Branch operation (if any) 0 1400 j. LOSSES from Branch operation (if any) BRANCH CURRENT or Investment in Branch BRANCH CURRENT or Investment in Branch Branch current balance after closing entries 30550 1 Cash Balance 59300 Remittance of cash from branch 53400 Cash collection from receivable 113600 Less: Cash transfer to branch -42500 Payments on account -124000 Expenses paid -26600 Dividends paid -10000 Cash balance 23200 Accounts receivable 19050 Merchandise inventory, end 48500 Prepaid expenses 2050 Home office total current assets 92800 Furniture and Fixtures 28000 Less: Accum. Depreciation -6230 Branch Current 30550 Home office total assets 145120 Accrued expenses 1350 Accounts payable 21300 Home office total liabilities 22650 Retained earnings, beg. Bal. 70420 Add: Net income of the home office 13450 Less: Net loss from branch -1400 Dividends paid -10000 Retained earnings. Ending bal. 72470 Sales 105000 Less: Cost of Goods Sold Inventory, beginning 40120 Purchases 122500 Less: Shipment to branch -50200 Goods available for sale 112420 Less: Inventory, ending -48500 -63920 Gross Profit 41080 Less: Expenses paid 26350 Depreciation expense 1180 Accrued expenses 100 -27630 Net Income from own operation 13450 Net loss from branch operation -1400 Home office net income 12050 Combined net income 12050 Combined assets 155670 Combined liabilities 33200 Combined SHE 122470 PROBLEM 3 Home office Store Furniture and Fixture - Branch 900 Branch Current 900 Shipment and installation cost paid by Branch Allowance for Doubtful accounts 150 Branch Current 150 a. Transfer of cash to Branch 1500 900 c. Shipment and installation cost paid by Branch b. Shipment to Branch 10200 150 Write off accounts from the transfer receivable d. Transfer of Accounts receivable 2600 Shipment to Branch 1250 1000 Cash remittance by the Branch BALANCE 15550 2050 BALANCE UNADJUSTED BALANCE 13500 g. Depreciation charged to Branch 35 Shipment in Transit 600 Expense incurred by branch and paid by home office 475 1110 (balance before closing entries) ADJUSTED BALANCE 14610 BRANCH CURRENT or Investment in Branch h. PROFIT from Branch operation (if any) -560 j. LOSSES from Branch operation (if any) Branch current balance after closing entries 14050 1 Cash Balance 15000 Remittance of cash from branch 1000 Cash collection from receivable 40000 Less: Cash transfer to branch -1500 Payments on account -36200 Expenses paid -9200 Dividends paid Cash balance 9100 Accounts receivable, net 32950 Merchandise inventory, end 44500 Prepaid expenses Home office total current assets 86550 Store Furniture and Fixtures 12000 Less: Accum. Depreciation -3950 8050 Store Furniture and Fixtures - Branch 3900 Less: Accum. Depreciation -785 3115 Branch Current 14050 Home office total noncurrent assets 25215 Home office total assets 111765 Accrued expenses 750 Accounts payable 29150 Home office total liabilities 29900 Retained earnings, beg. Bal. 28200 Add: Net income of the home office 3665 Less: Dividends paid - Retained earnings. Ending bal. 31865 Common stock 50000 Home office shareholder's equity 81865 Sales 34600 Less: Cost of Goods Sold Inventory, beginning 46000 Purchases 31600 Less: Shipment to branch -12050 Goods available for sale 65550 Less: Inventory, ending -44500 -21050 Gross Profit 13550 Less: Expenses 8475 Depreciation expense 100 Accrued expenses 750 -9325 Net Income from own operation 4225 Net loss from branch operation -560 Home office net income 3665 Combined net income 3665 Combined assets 113665 Combined liabilities 31800 Combined SHE 81865 PROBLEM 3 (HOME OFFICE ALLOWS THE BRANCH TO CARRY ITS DEPRECIABLE AND NONDEPRECIABLE ASSETS. Home office Branch Current 2250 Accumulated Depreciation 750 Store Furniture and Fixtures 3000 Allowance for Doubtful accounts 150 Branch Current 150 a. Transfer of cash to Branch 1500 150 Write off accounts from the transfer receivable b. Shipment to Branch 10200 1000 Cash remittance by the Branch c. Transfer of store furniture and fixtures 2250 d. Transfer of Accounts receivable 2600 Shipment to Branch 1250 BALANCE 17800 1150 BALANCE UNADJUSTED BALANCE 16650 Shipment in Transit 600 Expense incurred by branch and paid by home office 475 1075 BRANCH CURRENT or Investment in Branch (balance before closing entries) ADJUSTED BALANCE 17725 h. PROFIT from Branch operation (if any) -560 j. LOSSES from Branch operation (if any) Branch current balance after closing entries 17165 1 Cash Balance 15000 Remittance of cash from branch 1000 Cash collection from receivable 40000 Less: Cash transfer to branch -1500 Payments on account -36200 Expenses paid -9200 Dividends paid Cash balance 9100 Accounts receivable, net 32950 Merchandise inventory, end 44500 Prepaid expenses Home office total current assets 86550 Store Furniture and Fixtures 12000 Less: Accum. Depreciation -3950 8050 Branch Current 17165 Home office total noncurrent assets 25215 Home office total assets 111765 Accrued expenses 750 Accounts payable 29150 Home office total liabilities 29900 Retained earnings, beg. Bal. 28200 Add: Net income of the home office 3665 Less: Dividends paid - Retained earnings. Ending bal. 31865 Common stock 50000 Home office shareholder's equity 81865 Sales 34600 Less: Cost of Goods Sold Inventory, beginning 46000 Purchases 31600 Less: Shipment to branch -12050 Goods available for sale 65550 Less: Inventory, ending -44500 -21050 Gross Profit 13550 Less: Expenses 8475 Depreciation expense 100 Accrued expenses 750 -9325 Net Income from own operation 4225 Net loss from branch operation -560 Home office net income 3665 Combined net income 3665 Combined assets 113665 Combined liabilities 31800 Combined SHE 81865 BRANCH OFFICE EQUITY ACCOUNT c. Shipment returns from Branch c. Shipment returns to Home office xx e. Depreciable assets acquired e. Depreciable assets acquired and will be used by the Branch and will be used by the Branch xx f. Cash remittance by the Branch f. Cash remittance to Home office xx BALANCE xx k. Adjusting items/reconciling items (if any) k. Adjusting items/reconciling items (if any) xx xx j. LOSSES from Branch operation (if any) j. LOSSES from Branch operation (if any) xx Branch office c. Shipment returns from Branch c. Shipment returns to Home office 0 e. Depreciable assets acquired e. Depreciable assets acquired and will be used by the Branch and will be used by the Branch 8000 f. Cash remittance by the Branch f. Cash remittance to Home office 53400 BALANCE 61400 k. Adjusting items/reconciling items (if any) k. Adjusting items/reconciling items (if any) 0 0 j. LOSSES from Branch operation (if any) j. LOSSES from Branch operation (if any) 1400 BRANCH CURRENT or Investment in Branch HOME OFFICE CURRENT BRANCH CURRENT or Investment in Branch HOME OFFICE CURRENT 1 Cash Received cash transfer 42500 Cash collection from receivable 53400 Less: Remittance of cash to home office -53400 Payments on account -12250 Purchased asset on cash -8000 Expenses paid -18000 Cash balance 4250 Accounts receivable 12600 Merchandise inventory, end 23500 Prepaid expenses 750 Branch total assets 41100 Note: The home office is the accountable in keeping the records for any depreciable assets which in this case the furniture and fixtures acquired by the branch will be accounted by the home office 2 Accrued expenses 300 Accounts payable 10250 Home office current after closing 30550 Brach total liabilities 41100 Sales Less: Cost of Goods Sold 66000 Inventory, beginning Purchases 0 Add: Shipment from branch 22500 Goods available for sale 50200 Less: Inventory, ending 72700 Gross Profit -23500 -49200 Less: Expenses paid 16800 Depreciation expense 17250 650 Accrued expenses 300 -18200 Net loss -1400 Branch office c. Home office current 900 Cash 900 Home office current 150 Accounts receivable - home office 150 c. Shipment and installation cost paid by Branch c. Shipment and installation cost paid by Branch 900 Write off accounts from the transfer receivable Write off accounts for the transfer receivable 150 Cash remittance by the Branch Cash remittance to Home office 1000 BALANCE 2050 3150 315 BRANCH CURRENT or Investment in Branch HOME OFFICE CURRENT j. LOSSES from Branch operation (if any) j. LOSSES from Branch operation (if any) 1 Cash Received cash transfer 1500 Cash collection from receivable 4200 Less: Remittance of cash to home office -1000 Payments on account -1450 Payments on shipment and installation -900 Expenses paid -1250 Cash balance 1100 Accounts receivable 3600 Accounts receivable - HO 850 Merchandise inventory, end 10400 Prepaid expenses Branch total assets 15950 Note: The home office is the accountable in keeping the records for any depreciable assets which in this case the furniture and fixtures acquired by the branch will be accounted by the home office 2 Accrued expenses 350 Accounts payable 1550 Home office current after closing 14050 Brach total liabilities 15950 Sales 6200 Less: Cost of Goods Sold Inventory, beginning 0 Purchases 3000 Add: Shipment from branch 12050 Goods available for sale 15050 Less: Inventory, ending -10400 -4650 Gross Profit 1550 Less: Expenses 1725 Depreciation expense 35 Accrued expenses 350 -2110 Net loss -560 PROBLEM 3 (HOME OFFICE ALLOWS THE BRANCH TO CARRY ITS DEPRECIABLE AND NONDEPRECIABLE ASSETS. Branch office Store furniture and fixtures 3150 Home office current 2250 Cash 900 Home office current 150 Accounts receivable - home office 150 Write off accounts from the transfer receivable Write off accounts for the transfer receivable 150 Cash remittance by the Branch Cash remittance to Home office 1000 BALANCE 1150 BRANCH CURRENT or Investment in Branch HOME OFFICE CURRENT j. LOSSES from Branch operation (if any) j. LOSSES from Branch operation (if any) -560 1 Cash Received cash transfer 1500 Cash collection from receivable 4200 Less: Remittance of cash to home office -1000 Payments on account -1450 Payments on shipment and installation -900 Expenses paid -1250 Cash balance 1100 Accounts receivable 3600 Accounts receivable - HO 850 Merchandise inventory, end 10400 Store furniture and fixtures 3150 Accumulated Depreciation (3150/7.5 years x 1/12) -35 Branch total assets 19065 2 Accrued expenses 350 Accounts payable 1550 Home office current after closing 17165 Brach total liabilities 19065 Sales 6200 Less: Cost of Goods Sold Inventory, beginning 0 Purchases 3000 Add: Shipment from branch 12050 Goods available for sale 15050 Less: Inventory, ending -10400 -4650 Gross Profit 1550 Less: Expenses 1725 Depreciation expense 35 Accrued expenses 350 -2110 Net loss -560 xx a. Received cash from Home office xx b. Shipment from Home Office d. Expense incurred by Branch xx but paid by Home Office xx BALANCE XX UNADJUSTED BALANCE xx g. Depreciation charged by the Home Office xx i. Adjusting items/reconciling items (if any) xx XX ADJUSTED BALANCE (balance before closing entries) xx h. PROFIT from Branch operation (if any) XX Home office current balance after closing entries 42500 a. Received cash from Home office 50200 b. Shipment from Home Office d. Expense incurred by Branch 0 but paid by Home Office 92700 BALANCE 31300 UNADJUSTED BALANCE 650 g. Depreciation charged by the Home Office 0 i. Adjusting items/reconciling items (if any) 650 31950 ADJUSTED BALANCE (balance before closing entries) 0 h. PROFIT from Branch operation (if any) HOME OFFICE CURRENT HOME OFFICE CURRENT 30550 Home office current balance after closing entries 1500 a. Received cash from Home office 10200 b. Shipment from Home Office 2600 d. Transfer of Accounts receivable 1250 Shipment from Home Office 15550 BALANCE 13500 UNADJUSTED BALANCE 35 g. Depreciation charged by the Home Office 475 Expense incurred by branch and paid by home office 600 Shipment In Transit from Home office 1110 14610 ADJUSTED BALANCE (balance before closing entries) HOME OFFICE CURRENT h. PROFIT from Branch operation (if any) 14050 Home office current balance after closing entries 1500 a. Received cash from Home office 10200 b. Shipment from Home Office 2250 c. Transfer of store furniture and fixtures 2600 d. Transfer of Accounts receivable 1250 Shipment from Home Office 17800 BALANCE 16650 UNADJUSTED BALANCE 475 Expense incurred by branch and paid by home office 600 Shipment In Transit from Home office 1075 HOME OFFICE CURRENT 17725 ADJUSTED BALANCE (balance before closing entries) h. PROFIT from Branch operation (if any) 17165 Home office current balance after closing entries