JOHN MARK PALAPUZ

BSAC III

How much is the total assets in the combined statement of financial position?

Cash 6,068,000

N/R 1,120,000

Inventory 1,680,000

Equipment 4,480,000

Accumulated depreciation-equip. (448,000)

Furniture 560,000

Accumulated depreciation-Furniture (56,000)

Total assets 13,404,000 D

How much is the total profit in the combined statement of profit or loss?

Sales 5,600,000

COGS

Beg. Inventory 2,600,000

Purchases 448,000

Freight-in 160,000

Total GAFS 3,208,000

End. Inventory (1,680,000) (1,528,000)

Gross profit 4,072,000

Depreciation expense (944,000)

Gen OH expense (44,800)

Utilities expense (112,000)

Various operating expense (1,120,000)

1,851,200 A

How much is the adjusted balance of the “home office” account?

Unadjusted balances 280,800

Shipment in transit 80,000

Collection of receivable (40,000)

Allocation of cost recorded twice (20,000)

Mathematical error in recording 43,200

344,000 B

How much is the net adjustment to the “Home office” account? increase (decrease)

Unadjusted balance 528,000

Allocated expense 40,000

Erroneous correcting entry (100,000)

Erroneous debit memo 12,000

Net adjustments (48,000) C

How much is adjusted balance of the “Home Office” account?

No entry is needed in the home offices books when a branch requires assets to be
maintained in the branch books.
How much is the unadjusted balance of the “Home office” account?

Investment in branch Home office

Unadjusted balance 728,000 580,000 C

A - (48,000)

B - 36,000

C (80,000) -

D (108,000) -

E - (28,000)

Adjusted balance 540,000 540,000

How much is the unadjusted balance of the “Investment in Alpha Branch” account in
the home office books?

Investment in Alpha Home office

branch

Unadjusted balance 556,000 C 580,000

A (60,000) -

B 64,000 -

C 20,000 -

D (16,000) (16,000)

Adjusted balance 564,000 564,000

How much is the combined profit?

Sales 8,400,000

Cost of sale

Beg. Inventory 1,200,000

Purchases 4,960,000

Freight-in 200,000

Total GAFS 6,360,000

End. Inventory (2,680,000) (3,680,000)

Gross profit 4,720,000

Operating expense (1,280,000)

Combined office 3,440,000

B

How much is the branch’s ending inventory at cost?

Acquired from HO (30Kx80%)/2 20,000

Add: acquired from outsiders 6,000

Branch ending inventory at cost 26,000 A

How much is the profit (loss) of the branch as far as the home office is concerned?

Sales (22K+74K) 96,000

Cost of sale

Shipment from HO @ cost 45,000

Purchases 26,000

Cost of goods available for sale 71,000

End. Inventory (26,000) (45,000)

Gross profit 51,000

Expense (50,000)

Branch net income as far as HO 1,000 C

How much is the amount of merchandise in transit at billed price?

21,000 x 20% = 4,200

4,200 ÷120% = 3,500 B

How much is the combined cost of goods sold?

Jan 1, Inventory at cost 107,500

Purchases 215,000

Merchandise available for sale 322,500

Ending inventory at cost (77,300)

COGS 245,200 D
 How much is the balance of the “allowance for markup” account before year-end
adjustments?

Shipment from home at billed price 480,000

Return of damage goods (72,000)

TGAFS at billed price 408,000

Multiply: total mark up or adjusted bal. Of allowance 20%/120%

68,000 C

How much is the true profit of the branch to be taken up in the home office books?

Total mark up 68,000

Less: unrealized mark up in ending inventory

(120Kx20%/120%) (20,000)

Realized mark up 48,000

Loss (40,000)

True profit 8,000 A

How much is the realized markup?

Allowance account beg. 16,000

Mark up on shipments 240,000

Total mark up 256,000

Less: Unrealized mark up in end. Inventory (96,000)

Realized mark up 160,000 B