Professional Documents
Culture Documents
Balance
22,180 cr
40,480 cr
46,480 cr
38,380 cr
37,750 cr
34,750 cr
55,750 cr
60,250 cr
55,250 cr
Required:
5. On January 4, 2014, Manila Toy Company opened its first branch with instructions to
Sylvia Cruz, the branch manager, to perform the functions of granting credit, billing
customers, accounting for receivables, and making cash collections. The branch paid its
operating expenses by checks drawn on its bank account. The branch obtained
merchandise solely from the home office. Billings for these shipments were at cost. The
following are their adjusted trial balances on December 31, 2015:
Home Office
Branch
Debit
Credit
Debit
Credit
Cash
42,000
64,600
Notes Receivable
7,000
35,800
Accounts Receivable (net)
80,400
37,300
Inventories
95,800
42,000
Furniture & Equipment (net)
48,100
Investment in Branch
185,000
Accounts Payable
43,300
2,200
Common Stock, P2 par
200,000
Home Office Equity
185,000
Retained Earnings
25,000
Sales
507,650
101,100
Purchases
300,500
Shipments to branch
52,350
Operating expenses69,500
56,250
Shipments from Home Office
_______
_______
52,350
______
Totals
828,300
828,300 288,300
288,300
Goods on hand December 31 are as follows: Home Office P83,450 and Branch P36,150.
Required:
a. Prepare the closing journal entries on December 31, 2015 in the accounting records of
the branch.
b. Prepare the entry to record the branch profit or loss as well as the closing entries in the
accounting records of the home office.
c. Prepare the financial statements: individual and combined. Use the working paper
format on page 229.