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  • Account For Home Office and Branch Transactions. Problem

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    Devine Grace A. Maghinay
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    This document discusses home office and branch accounting. It provides examples of transactions between a home office and branch that need to be recorded and eliminated for the purposes of preparing combined financial statements. Specifically, it discusses establishing a working fund for a new sales agency, shipments of merchandise between the home office and branch, and individual and combined trial balances for the home office and branch. The combined income statement would include sales of 250,000 to unrelated customers, as intercompany transactions of 200,000 would be eliminated. It also provides a section discussing relying on God and acting according to his will.

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    Grace-AST module 8

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    This document discusses home office and branch accounting. It provides examples of transactions between a home office and branch that need to be recorded and eliminated for the purposes of preparing combined financial statements. Specifically, it discusses establishing a working fund for a new sales agency, shipments of merchandise between the home office and branch, and individual and combined trial balances for the home office and branch. The combined income statement would include sales of 250,000 to unrelated customers, as intercompany transactions of 200,000 would be eliminated. It also provides a section discussing relying on God and acting according to his will.

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    115 views2 pages

    Account For Home Office and Branch Transactions. Problem

    Uploaded by

    Devine Grace A. Maghinay
    This document discusses home office and branch accounting. It provides examples of transactions between a home office and branch that need to be recorded and eliminated for the purposes of preparing combined financial statements. Specifically, it discusses establishing a working fund for a new sales agency, shipments of merchandise between the home office and branch, and individual and combined trial balances for the home office and branch. The combined income statement would include sales of 250,000 to unrelated customers, as intercompany transactions of 200,000 would be eliminated. It also provides a section discussing relying on God and acting according to his will.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    MODULE 8: Home office, Branch and Agency Accounting

    1. Account for home office and branch transactions.


    Problem
    1. Entity A opens a sales agency in Cebu City and a working fund of P20, 000 is established on
    imprest basis. The first payment from the funs is P3,000 for the rent. The transaction should
    be recorded by the home office as follows:

    No Entry, because this is recorded when the working fund is replenished.

    2. The following information pertains to shipments of merchandise from Home Office to


    Branch during 1991:
    Home office’s cost of merchandise 160,000
    Intracompany billing 200,000
    Sales by branch 250,000
    Unsold merchandise at Branch on December 31, 1991 20,000

    In the combined income statement of Home Office and Branch for the year ended December 31,
    1991 what amount of the above transactions should be included in sales?
    a.250,000 c. 200,000
    b.230,000 d. 180,000

    In the preparation of combined income statement of home office and branch, all intercompany
    transactions should be eliminated as if it had never occurred. Therefore, the only transaction that
    should remain are transactions to unrelated customers and that is P250,000 sales by branch.

    3. Prepare individual and combined financial statements home offices and its branches.
    The individual trial balance balances of a home office and its branch are shown below:
    Home Office Branch
    Dr. (Cr.) Dr. (Cr.)
    Cash 600,000 250,000
    Account Receivable 720,000 280,000
    Inventory, Beg 650,000 10,000
    shipment from home office 520,000
    Purchases 880,000 15,000
    frieght in 33,000 5,000
    shipments to branch (520,000)
    investment in branch 545,000
    land 1,000,000
    building 4,000,000
    Accum deprecitaion-bldg (2,400,000)
    equipment 800,000 500,000
    accump depreciation - equip (200,000) (100,000)
    acount payable (360,000) (40,000)
    share capital (2,000,000)
    share premium (50,000)
    retained earnings (946,000)
    home office (545,000)
    sales (2,900,000) (1,080,000)
    depreciation expense 400,000 75,000
    salaries expense 180,000 100,000
    utilities expense 18,000 10,000
    totals - -
    inventory, end 160,000 56,000

    Prepare the combined statement of profit or loss and statement of financial position.

    4. Nourish your soul


    (John 15:5) “I am the vine, you are the branches. He who abides in Me, and I in him, bears much fruit;
    for without Me you can do nothing.”

    The verse itself is a beautiful description of our complete dependency on God. Without Him, we can do
    nothing because our lives rests on His hands. Jesus Christ established this truth because He lived His whole life
    in definite reliance upon God. God wanted us to walk in spirit and truth, and to obey His will so that His life
    may be lived in us and through us. Until we meekly admit that we can do nothing, we will continue to foolishly
    and unsuccessfully strive to bring good fruit in our own strength. We must apply this in our daily lives, and
    make it as one of our principles, that Jesus is the vine and we are the branches. We must live in Him and allow
    His spirit to live His life through us like how he dwelled in God and acted only according the Father's will.

    5. Quiz
    In this module I learned that combined financial statements are prepared by adding together similar items of
    assets, liabilities, income and expenses and eliminating the reciprocal accounts and other inter-office accounts.

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