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HB Quiz 2020
HB Quiz 2020
Additional information.
1. The mark-up on shipments has been constant at 25% above cost.
2. All cash collections made by the branch are deposited in a local bank to the account of the home office. Deposits
of this nature included the following:
3. Expenses of P2,500 charged by the home office to the branch have not yet been taken up by the branch.
4. The inventories as of December 31, 2020 were:
Home Office P 15,000
Branch (excluding in transit) from Home
Office 6,000
From the suppliers 2,100
1. What is the combined net income (net loss) of the Home Office & Branch for 2020?
2. What is the correct balance of the Home Office Equity account as of December 31, 2020?
3. What is the combined total asset of the branch as of December 31, 2020?
The pre-closing general ledger trial balances at December 31, 2020 for Green Rose Company and its branch are shown
below:
Green Rose Company
Trial Balances
December 31, 2020
Debits
Branch 20,000.00
Oh Feel Young company is engaged in merchandising both at its Home Office in Makati and at its Branch in Korea.
Selected accounts taken from the trial balances of the home office and the branch as of December 31, 2020 follow:
Makati Korea
Debits
Inventory Beg 23,000.00 11,550.00
Branch 58,300.00
Purchases 190,000.00 105,000.00
Freight In from Home Office 5,500.00
Operating Expenses 52,000.00 28,000.00
Credits
Home Office 53,300.00
Sales 155,000.00 140,000.00
Shipment to Branch 110,000.00
Allowance for Overvaluation at 1/1/2020 1,000.00
Additional information:
a. The Korea branch gets all of its merchandise from the home office. The home office bills the goods at cost plus a
10% mark-up. At December 31, 2020, a shipment with a billed value of P5,000 was still in transit. Freight on this
shipment was P250 and is to be treated as part of the inventory.
b. Inventories on December 31, 2020, excluding the shipment in transit, follow:
Home office at cost P30,000
Branch at billed price(excluding freight of P520) 10,400
8. What is the net income of the home office from its own operation for 2020?
9. What is the net income of the Korea Branch for 2020?
10. What is the balance of allowance for overvaluation at December 31, 2020?
The branch manager of Baste Company submitted a report on December 31, 2020 which contained among others the
following information:
Petty Cash Fund P1,500
Accounts Receivable 12/31/2019 43,800
Accounts Receivable 12/31/2020 49,140
Merchandise Inventory 12/31/2019 37,170
Sales 198,720
Allowance for Doubtful Account 3,600
Accounts Written off 5,520
Cost of Sales 131,800
Shipments from HO 136,000
Cash Expenses 54,330
Depreciation Expense (charged) 3,600
The JPIA company of Cavite City opened a branch in Tanza on January 3, 2020 to expend the market of its product.
Merchandise shipped during 2020 to Tanza branch totaled P104,000 which included a profit of 20% based on billed price.
At year end, the inventory at billed price was P12,500. Other transactions affecting the branch are as follows: Sales on
account, P117,000, cash collections, P84,000 after allowing cash discounts of P1,480; Expenses P20,000 including unpaid
of P1,300, cash remittance to home office, P65,000.
14. The true net income of the branch after adjustment made by the H.O. was?
Louie Corporation operates branches in Cavite & Laguna. The following are some of the intercompany transactions for
the month of August.
a. Cavite made a fund transfer to Laguna per Home Office instruction P10,000
b. Cavite collected Laguna branch receivables of P8,500 less a 2% discount.
c. Laguna shipped merchandise costing P15,000 to Cavite.
d. Home Office shipped merchandise costing P20,000 to Laguna and paid freight of P300. Laguna paid additional
freight of P300.
e. Laguna reshipped one-half of the goods received in letter d to Cavite. Cavite paid for freight cost of P200. Normal
freight from Home Office is only P400.
f. Home office transferred machinery costing P3,000, to be depreciated at 10%. It is home office policy that fixed
assets be carried only in the home office books. The transfer was acknowledged by Laguna.
g. The machinery is to be depreciated at the end of the month.
h. Cavite reported a net loss in the amount of P9,500 while Laguna reported a net income of P32,750.
15. What is the balance of the Home Office Equity account in Cavite books?
16. What is the balance of the Home Office Equity account in Laguna books?