Solution manual advanced accounting by baysa lupisan chapter 09

1 Books of Branch No... Allowance for Intercompany Inventory Profit 22,000 Bal... Baguio Branch 29,400Dagupan Branch Books c... Baguio Branch Booksa.

Exercise 9 - 1

Books of Branch R

Books of Branch S

Books of the Home Office

Exercise 9 - 2

Books of Branch No 1

Books of Branch No 5

Books of the Home Office

Exercise 9 – 3

Home Office Books

1 no entry

120,000/240,000 = 50%

3 no entry

5 no entry

Branch 360,000

6 no entry

P300,000 x 50/150 = P100,000

Branch Books

Exercise 9 - 4

Less Merchandise from home office at billed price

Markup on merchandise shipped to branch P 36,000

Markup on current shipment (P96,000 – P80,000) 16,000

Markup on beginning inventory P 20,000

x 120/20 120,000

b Allowance for Intercompany Inventory Profit 22,000

Bal of allowance before adjustment P36,000

Adjusted balance of allowance acct

(P84,000 x 20/120) 14,000

Exercise 9 – 5

Home Office Books

150,000/300,000 = 50%

2 no entry

Realized markup on beginning inventory

P600,000 x 55% = P330,000 x 25/125* P 66,000

Realized markup on current shipments

P450,000 x 1/3 = P150,000 x 50/150 50,000

*(600,000 – 480,000) / 480,000 = 25%

Branch Books

P590,000 + P280,000 = P870,000

3 no entry

Exercise 9 – 6

120,000/240,000 = 50%

160,000/400,000 = 40%

3 Branch 130,000

Realized markup on 1st inventory transfer P120,000

Realized markup on 2nd inventory transfer

(P640,000 – P360,000) x 40/140 80,000

Exercise 9 - 7

Required balance of allowance (markup on branch ending inventory)

Exercise 9 - 8

a Merchandise available for sale at billed price (P16,200 + P20,250) P36,450 Merchandise available for sale at cost (P36,450/135%) 27,000 Unrealized intercompany inventory profit balance before adjustment P 9,450

Balance before adjustment P 9,450

Adjusted balance (P18,900 x 35/135) 4,900

Home Office Books

Branch Books

Exercise 9 – 9

1 P20,000 ÷ 25/125 = P100,000

2 Allowance for Markup in Branch Inventory 74,000

P100,000 + P350,000 – P80,000 = P370,000 x 25/125 =

P74,000

Exercise 9 - 10

Separate cost of goods sold of the home office:

Separate cost of goods sold of the branch:

Inventory, beginning

From home office (P36,000 / 120%) 30,000

Shipments from home office (P720,000 / 120%) 600,000

Less Inventory, end:

From outside purchases P10,000

From home office (P42,000 / 120%) 35,000 45,000 693,000

Exercise 9– 11

** 90,000 / 120% = P75,000

P60,000 + P450,000 – P90,000 = P420,000

Inventory, beginning P 60,000 P 50,000 P 10,000

Inventory, end 90,000 75,000 15,000 Cost of goods sold P420,000 P350,000 P 70,000

Exercise 9 - 12

Cost of Goods Sold

Sales, net of Sales Returns (P15,000 - P2,000) P13,000

÷ 120%

Branch Books

Exercise 9 – 13

PROBLEMS

Problem 9 – 1

Billed Price Cost Markup Beginning inventory:

-Shipments from Home Office P180,000 + P30,000 210,000 168,000 42,000

Less Ending inventory:

-Acquired from home office P60,000 + P30,000 90,000 72,000 18,000

Problem 9 – 2

Home Office Books

e Baguio Branch 29,400

Dagupan Branch Books

c no entry

e no entry

Baguio Branch Books

a no entry

c no entry

d no entry

g no entry

i no entry

Problem 9 – 3

Requirement 1

Home Office Books

5 – 7 - no entry

Baguio Branch Books

Accounts Receivable 2,400

7 Merchandise Inventory, end P30,100 + P1,400 31,500

Merchandise Inventory, beginning P257,600 + P1,400 17,500

Requirement 2

(P17,500 + P259,000 – P31,500) x 40/140

Requirement 3

Problem 9 - 4

Requirement 1

Triple D Bookstore Statement of Recognized Income and Expenses - Quezon City Branch

For the Year Ended December 31, 2008

Cost of Goods Sold:

Operating Expenses:

Advertising and Promotion P 6,400

Requirement 2

P136,750 x 25/125

Problem 9 - 5

Branch Books

Home Office Books

c Allowance for Overvaluation in Branch Inventory 15,600

P18,000 - (P12,000 x 25/125) = P15,600

Income Tax 12,110

Problem 9 - 6

Requirement 1

Triple F Products Inc - Branch

Trial Balance December 31, 2008

Requirement 2

Home Office Books

c Allowance for Overvaluation of Branch Inventory 17,420

P191,620 x 10/110

P21,100 ÷ (P202,400 + P29,700 – P21,100) = 10%

Branch Books

a Merchandise Inventory P202,400 – P189,200 13,200

b Sales 256,000

Requirement 3

Combined net income (P41,360 + P34,720 – P26,628) P49,452

Combined Merchandise Inventory:

Problem 9 - 7

Triple G Company Combined Statement of Recognized Income and Expenses

for Home Office and Branch For the Year Ended December 31, 2008

Cost of goods sold:

** P37,500 – P30,000 = P7,500/ P30,000 = 25%

Requirement 2

Davao Branch Books

b Income Summary 12,500

Requirement 3

Home Office Books

Markup on branch beginning inventory

(P24,000 x 20/120) P 4,000

Allowance balance before adjustments P11,500

Markup on branch ending inventory

(P26,000 x 25/125) 5,200

Problem 9 – 8

Requirement 2

Home Office 3,000

P15,000 x 20/120

MULTIPLE CHOICE

2 B 4 D 6 B 8 D

9 A

10 C

11 C

12 D P13,200 + P350 = P13,550

13 C P11,000 + P350 = P11,350

14 A P12,000 x 20/120 = P2,000

Merchandise available for sale from home office at cost P220,000 Cost of merchandise sold from home at cost

Sales, net of returns and allowances P165,250 Less Sales from merchandise purchased from

outsiders (P7,500 x 120%) 9,000 Sales from merchandise from home office P156,250

÷ 125%

Cost of sales at billed price P125,000 Billed price rate ÷ 125% 100,000

Required balance of allowance (P1,170,000 x 20/120) 195,000

Cost of goods sold (P120,000 x 3/4 x 125%) 112.500

19 B P90,000 + P36,000 – P2,520 – P50,400/120% = P60,900

Realized markup (P90,000 + P36,000 – P2,520 - P50,400 = P73,080) x 20/120 12,180

Realized markup [(P3,960 + P17,600 – P4,840) x 10/110] 1,520

22 B Branch ending inventory, at cost (P4,840 / 110%) P 4,400

Ending inventory to be reported in the combined balance sheet P15,600

Realized markup[P280,000 - (P50,000 – P6,600)] x 40/140 67,600

24 B Branch inventory from home office (P43,400 /140%) P31,000

Branch inventory from outside purchases 6,600

Cost of goods sold (P180,000 + P45,000 - P60,000) (165,000)

Realized markup [(P180,000 x 20/120) - P7,500 22,500

28 A Unadjusted balance of allowance account P99,900

Markup on 2008shipments from home office (P390,000 – P300,000) 90,000 Markup on beginning inventory P 9,900

x 130/30 P 42,900

Cost of goods sold (P54,600 + P390,000 + P144,600 - P48,750) (540,450)

Realized markup [P99,900 - (P39,000 x 30/130)] 90,900

30 C P39,000 x 30/130 = P9,000

Cost of goods sold (P104,000 - P12,500) ( 91,500)

Realized markup (P91,500 x 25/125) 18,300

Cost of goods sold (P5,000 + P2,000 + P26,400 – P4,500) ( 28,900)

Realized markup [P2,800 – (P3,960 x 10/110)] 2,440

Cost of goods sold (P16,000 + P80,000 – P24,000 – P20,000) ( 52,000)

Combined net income of the home office and branch P 55,940

Cost of sales:

Goods available for sale P213,000 Shipments to branch (P110,000/110%) 100,000 Goods available for own sale P113,000 Less Inventory, end 30,000 83,000

Cost of sales:

Inventory, beginning (P11,550 – P1,000) P 10,550 Shipments from HO, including freight-in 105,750 Goods available for sale P116,300 Less Inventory, end

[(P10,400 + P5,000)/110%] + P520 + P250 14,770 101,530

38 B Unadjusted balance of allowance account P 57,500

Markup on 2008 shipments (P200,000 x 25%) 50,000

x 125/25 Branch beginning inventory at billed price P 37,500

Cost of goods sold (P37,500 + P250,000 - P40,000) (247,500)

Realized markup (P247,500 x 25/125) 49,500

Shipments from home office 93,750

Cost of goods sold reported by branch P 121,400 Realized markup [P19,750 - (P6,000 x 25/125)* ( 18,550)

*P93,750 – P75,000 = P18,750/P75,000 = 25%

42 C The amount of the realized markup of P18,550

Cost of sales at cost (P70,000 + P350,000 – P84,000) – P96,000 ÷ P240,000

140%

45 A 72,500 ÷ (75,000 + 444,000 -84,000 – 72,500) 20%

Cost of goods sold (P75,000 + P444,000 - P84,000) (435,000)

Realized markup [P72,500 - (P84,000 x 20/120)] 58,500

48 C P84,000 x 20/120 = P14,000

49 A P84,000 – P14,000 = P70,000

50 B Home office inventory (P160,500 - P10,500) P 150,000

Branch inventory (P108,000/120%) 90,000 Inventories reported in the combined balance sheet P 240,000