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Statements
On December 31, 20x4, the end of a monthly period, the following trial balances were prepared for the
Spencer Co. and its branch. Merchandise was billed to the branch by the home office at 120% of cost.
Merchandise inventories: home office, cost P24, 200; branch, P14, 600, composed of
merchandise received from the home office (at billed price), P11, 700 and merchandise
purchased from outsiders (at cost), P2, 900.
Store supplies on hand: home office, P380; branch, P300.
Prepaid expenses (credit Miscellaneous General Expense): home office, P350; branch,
P120.
Accrued expenses (debit Miscellaneous General Expense): home office, P260; branch,
P105.
Depreciation of furniture and fixtures is recorded at 1% a month.
A cash remittance of P1, 500 had been recorded on the branch books, but the cash had
not yet been received by the home office and no entry has been made.
The home office had charge by the branch with the following expenses that have not yet
been recorded by the branch: taxes and insurance. P220.
Required:
1. Prepare individual statements for the branch and the home office for December 20x4.
2. Prepare a worksheet for combined statements.
3. Prepare combined statements for the branch and the home office.
4. Prepare the entries to adjust and close the books of (a) the branch and (b) the home
office.