Home Office and Branches

1 through 5 are based on the following: The Pre closing general ledger trial balance at December 31, 2014 for the Jolee
Whole Sale Company and its Quezon City Branch are shown

TRIAL BALANCE
HOME OFFICE BRANCH OFFICE
DR (CR) DR (CR)
CASH 360,000 80,000
ACCOUNT RECEIVABLE 350,000 120,000
INVENTORY 700,000 150,000
PLANT ASSETS – NET 900,000
BRANCH OFFICE 200,000
ACCOUNTS PAYABLE (360,000) (135,000)
ACCRUED EXPENSE (140,000) (25,000)
HOME OFFICE (90,000)
CAPITAL STOCK (500,000)
RETAINED EARNINGS (450,000)
SALES (4,400,000) (950,000)
PURCHASES 2,900,000 240,000
PURCHASES FROM HOME OFFICE 450,000
EXPENSES 440,000 160,000

Your audit disclosed the following data:

1. On December 23 the Branch Office manager purchased ₱40,000 of furniture and fixtures but failed to notify the
home office. The bookkeeper knowing that all fixed assets are carried on the Home Office recorded the proper
entry on the branch office records. It is the company`s policy not to take any depreciation on assets acquired in the
last half of a year.
2. On December 27 a branch office customer erroneously paid his account of ₱20,000 to the Home Office. The
bookkeeper made the correct entry on the home office books but did not notify the Branch Office.
3. On December 30 the branch office remitted cash of ₱ 50,000 which was received by the Home Office in January
2008.
4. On Dec ember 31, the branch office erroneously recorded the December allocated expenses from the Home Office
as ₱ 5,000 instead of ₱ 15,000
5. On December 31 the Home Office shipped merchandise billed at ₱ 30,000 to the branch office which was received
in January 2015.
6. The entire opening inventory of the Branch Office had been purchased from the home office. Home Office 2014
shipments to the Branch Office were purchased by the Home Office in 2014. The physical inventories at December
31, 2014 excluding the shipment in transit are:
Home Office - ₱550,000
Branch Office - ₱200,000 ( comprised of ₱ 180,000 from Home Office and ₱ 20,000 from outside
vendors)
7. The Home Office consistently bills shipment to the branch office at 20% above cost. The sales account is credited
for the invoice price.

1. How much is the Correct Ending Inventory of Jolee Whole Sale Company?
a. ₱ 750,000 b. ₱ 720,000 c. ₱ 745,000 d. ₱ 738,000
2. How much is the adjusted balance of reciprocal account before net income of branch?
a. ₱ 110,000 b. ₱ 190,000 c. ₱ 80,000 d. ₱ 130,000
3. How much is the correct net income of the branch?
a. ₱ 220,000 b. ₱210,000 c. ₱ 234,000 d. ₱ 224,000
4. How much is the correct cost of sales of the Jolee Whole Sale Company?
a. ₱ 3,665,000 b. ₱ 3,595,000 c. ₱ 3,290,000 d. ₱ 3,220,000
5. How much is the correct sales of Jolee Whole Sale Company?
a. ₱ 5,350,000 b. ₱ 4,900,000 c. ₱ 4,870,000 d. ₱ 4,975,000
Question 6 through 10 are based on the following comparative trial balance of the home office and the two branches of
Jolee Corporation at December 31, 2014 were as follows:

Home Office Branch 1 Branch 2

Cash ₱ 5,000 ₱ 15,000 ₱ 22,000
Account Receivable (Net) 80,000 30,000 40,000
Inventories 150,000 60,000 48,000
Branch 1 170,000