1) Inventory from home office (3.2M*25%) 800,000.

00
Inventory from outsiders (826 250*25%) 2,016,562.50
Inventory reported by branch 1,006,562.50

2) Bill price 400,000.00

Cost 300,000.00
Gross Profit 100,000.00
Adjusted balance 14,000.00
Realized Profit 86,000.00

3) Cost of inventory (46 000/0.2) 230,000.00

Mark-up 46,000.00
Total inventory 276,000.00
Beginning inventory 36,000.00
Total shipment 240,000.00

Total inventory 276,000.00

Ending inventory 60,000.00
Sold inventory 216,000.00
Cost (216 000/0.2) 180,000.00
Realized Profit 36,000.00

4) Inventoy from HO, at cost [(82 500- 16,500) /1.2] 55,000.00

Inventory from other suppliers 16,500.00
Branch ending inventory, at cost 71,000.00

Cost of inventory 55,000.00

Multiply 0.20
Allow. for overvaluation of branch inventory 11,000.00

5) Sales 264,000.00
Inventory sold from purchase (137 500- 16 500) (121,000.00)
Inventory sold from HO, at BP
Shipments from HO 123,750.00
Ending inventory (55,000.00) (68,750.00)
Gross Profit 74,250.00
Expenses (71,500.00)
True NI of branch 2,750.00

6) Branch inventory balance 157,500.00

Allowance on current shipment 150,000.00
Beginning balance on 7,500.00
Divide: 0.20
Cost of inventory from office 37,500.00
Multiply: 1.20
Inventory from home office at BP 45,000.00

7) Merchandise inventory on hand (BP) 54,350.00

Inventory from outsiders 24,350.00
Inventory from home office on hand, at BP 30,000.00
Goods in transit 24,000.00
Inventory from home office, at BP 54,000.00
Divide: 1.20
Inventory from home office, at cost 45,000.00
Inventory from outsiders 24,350.00
Total branch inventory, at cost 69,350.00
 Merchandise inventory on hand -HO 104,000.00
173,350.00

8) Sales 3,765,000.00
Inventory sold form HO, at BP (2,187,500.00)
Inventory sold from purchases (870,000.00)
Gross Profit 707,500.00
Expenses 250,000.00
Net Income 457,500.00

9) Shipments from HO 2,187,500.00

Shipments to branch 1,750,000.00
Mark-up on current shipment 437,500.00
Alllow for overvaluationof inventory 452,500.00
Mark-up on beginning inventory 15,000.00

at cost mark-up at billed price

Beginning inventory 105,000.00 15,000.00 120,000.00
Purchases 1,000,000.00 - 1,000,000.00
Shipments 1,750,000.00 437,500.00 2,187,500.00
Ending inventory:
from purchases (130,000.00) - (130,000.00)
from home office (96,000.00) (24,000.00) (120,000.00)
Total 2,629,000.00 428,500.00 3,057,500.00

Inventory, at BP 3,057,500.00
Inventory, at cost 2,629,000.00
Overstatement as HO is concerned 428,500.00

10) Shipment to branch, at BP (125%) 3,200,000.00

Multiply 0.25
Allow for overvaluation of inventory- shipment 800,000.00
Allow for overvaluation of inventory - total 858,500.00
Allow for overvaluation of inventory -beginning 58,500.00
Divide: 0.20
Branch inventory, beginning 292,500.00

11) Inventory from home office (3.2M*25%) 800,000.00

Inventory from outsiders (826 250*25%) 2,016,562.50
Inventory reported by branch 1,006,562.50

12) Shipments to branch 2,000,000.00

Multiply: 0.25
Shipments to branch, at BP 2,500,000.00
Shipments from home office on hand 2,375,000.00
Goods in transit 125,000.00

at cost (100%) mark-up (25%) at BP (125%)

Beginning inventory 160,000.00 40,000.00 200,000.00
Net Purchases - - -
Shipments 2,000,000.00 500,000.00 2,500,000.00
Cost of Sale * (1,920,000.00) (480,000.00) (2,400,000.00)
Ending inventory 240,000.00 60,000.00 300,000.00
Goods in transit(included in ending inventory) 100,000.00 25,000.00 125,000.00

*Inventory sold, at BP: 3 360 000/ 1.4 = 2 400 000

13) Branch net income:
Sales 3,360,000.00
Inventory sold, at BP 2,400,000.00
Gross profit 960,000.00
Operating expenses 325,000.00 635,000.00
Realized Profit:
Allow for overvaluation of inventory 540,000.00
Markup on ending inventory 60,000.00 480,000.00
True NI of branch 1,115,000.00

14) "branch" "home office"

Should be
HO books Branch books
Unadjusted balances 205,500.00 147,250.00
Transaction number:
1 branch recieved cash from HO - - 15,750.00
2 shipment of merch from ho to br, 20% in transit - 25,000.00 125,000.00
3 purchase of branch to other suppliers - - -
4 branch sales for the month - - -
5 dr memo rep br's sh on adv exp- rec on 1/3/16 - 3,500.00 3,500.00
6 branch operating expense paid by HO - - 61,250.00
7 branch's remittance to HO not rec until january (29,750.00) - (29,750.00)
8 Merchandise inventory on hand - - -
Adjusted balance 175,750.00 175,750.00 175,750.00

15) "branch" "home office"

HO books Branch books
Unadjusted balances, 12/31/15 25,730.00 25,730.00
Transactions:
1 remittance of branch, 6400 still in transit (41,600.00) (48,000.00)
2 shipments to branch 175,000.00 156,000.00
3 branch expenses paid by home office 7,100.00 7,100.00
4 branch payable paid by home office 10,300.00 10,300.00
Unadjusted balances, 12/31/16 176,530.00 151,130.00

16) Should be
Unadjusted balances, 12/31/15 25,730.00
Transactions:
1 remittance of branch, 6400 still in transit (48,000.00)
2 shipments to branch 175,000.00
3 branch expenses paid by home office 7,100.00
4 branch payable paid by home office 10,300.00
Adjusted balances, 12/31/16 170,130.00

17) Transactions:
1 transfer of merch to makati agency(sampling) -
2 receipt of sales orders 130,000.00
3 collection of agency account by ho -
4 company paid for agency expenses (11,700.00)
5 replshmnt of agency fund upon rec of vouchers (6,850.00)
6 cost of goods identified with agency sales (93,000.00)
7 app value of samples, month-end (13000-8000) (5,000.00)
Net income 13,450.00

18) "branch" "home office"

HO books (dr) Branch books (cr)
 Adjustments:
1 unadjusted balances - -
2 branch remittance not received until 7/3/16 (40,000.00) -
3 branch returned merch not received until 7/5/16 (15,000.00) -
4 allocation of general expenses to branch, rec 6/30 - 28,000.00
5 branch store premium paid by ho, error (900-600) - 300.00
Total adjustments (55,000.00) 28,300.00

19) Bill price (300 000 *1.2) 360,000.00

Cost 300,000.00
Gross Profit 60,000.00
Adjusted balance 14,000.00
Realized Profit 46,000.00

20) Sales 320,000.00

Cost of sales (176 000/1.1) 160,000.00
Gross Profit 160,000.00
Operating Expense 124,500.00
Net income 35,500.00
Inventory {16500- [(16500/1.1) * 10%]} 15,000.00
True NI of branch 50,500.00

21) Home office:

Beginning inventory 36,400.00
Purchases 400,000.00
Shipment to branch (160,000.00)
Ending inventory (23,900.00) 252,500.00
Branch:
Inventory sold, at cost (176 000/ 1.1) 160,000.00
Returns, at cost (16 500/1.1) (15,000.00) 145,000.00
Cost of goods sold- combined income statement 397,500.00

22) Inventories, Jan 1 ( at BP) 15,800.00

Shipments from home office from Jan1 - March 31 (at BP) 71,500.00
Total inventory, at BP 87,300.00
Net sales, at BP [(51 840-3220)/1.1] (44,200.00)
Inventories not destrpyed by fire, at BP (7150/1.1) (6,500.00)
Merchandise destroyed by fire, at BP 36,600.00
Multiply: 0.90
Cost of merchandise destroyed by fire 32,940.00

23) at cost mark-up at billed price

Beginning inventory
from purchases 6,800.00 - 6,800.00
from inventory 12,000.00 3,000.00 15,000.00
Purchases
Shipments 24,000.00 6,000.00 30,000.00
Ending inventory:
from purchases 8,670.00 - 8,670.00
from home office (15,600.00) (3,900.00) (19,500.00)
Total 35,870.00 5,100.00 40,970.00

24) Allowance for overvaluation of branch inventory 120,000.00

Mark-up on shipment (480 000 - 400 000) 80,000.00
Mark-up on beginning inventory 40,000.00
 Merchandise inventory, Dec 1 350,000.00
Mark-up on beginning inventory 40,000.00
Cost of December 31 branch inventory 310,000.00

25) Total shipments from HO (209 000 + 11 000) 220,000.00

Shipments to branch 200,000.00
Mark-up on shipments 20,000.00
Branch merchandise mark-up (total) 22,000.00
Mark-up on beginning inventory 2,000.00

Inventory, Jan 1 23,100.00

Mark-up on beginning inventory 2,000.00
Cost of inventory, Jan 1 21,100.00

from HO from outsiders total

26) Beginning inventory 112,000.00 35,000.00 147,000.00
Acquisitions 784,000.00 196,000.00 980,000.00
Ending inventory (168,000.00) (42,000.00) (210,000.00)
Inventory sold, from HO at BP 728,000.00 189,000.00 917,000.00

Inventory sold, from HO at BP 728,000.00

Divide: 1.40
Cost of inventory 520,000.00
Multiply: 0.40
Mark-up on inventory 208,000.00

27) Branch 1:
* Inventory acquired from outsiders 175,000.00
Inventory acquired from branch 2 60,000.00
Branch 2:
Inventory acquired from outsiders 250,000.00
Consolidated inventory 485,000.00

Inventory acquired from branch 2 60,000.00

Multiply: (50 000/ 200 000) 0.25
Required balance 15,000.00

28) from HO from purchase total

Shipment to branch prior to its opening 300,000.00 300,000.00
Additional shipments to branch 120,000.00 120,000.00
Purchases from outside suppliers 72,500.00 72,500.00
Returns - shipment from branch back to HO (7,500.00) (7,500.00)
Ending inventory (165,000.00) (20,000.00) (185,000.00)
Inventory sold, at BP 247,500.00 52,500.00 300,000.00
Mark-up on inventory sold (247 500* 0.25) (49,500.00) - (49,000.00)
Cost of sales 198,000.00 52,500.00 250,500.00

29) HO books Branch books Combined

Sales 600,000.00 300,000.00 900,000.00
Cost of sales * (220,000.00) (184,000.00) (404,000.00)
Gross profit 380,000.00 116,000.00 496,000.00
Operating expense (120,000.00) (50,000.00) (170,000.00)
Net income 260,000.00 66,000.00 326,000.00

*Cost of sales- HO books: 100,000 + 350,000 - 200,000 - 30,000 = 220,000

 Cost of sales- branch books: (40 000 + 250 000 - 60 000)/1.25 = 184,000

30) Transferred inventory, at BP 140,000.00

Ending inventory, at BP 38,000.00
Inventory sold, at BP 102,000.00
Divide: 0.80
Cost of sales of branch 81,600.00

Ending inventory, at BP 38,000.00

Multiply: 0.80
Ending inventory of branch, at cost 30,400.00

31) Cost of goods sold 23,000.00

Merchandise inventory, 12/31/16 6,900.00
Total shipments from HO, at BP 29,900.00
Divide: 1.15
Total shipments to the branch, at cost 26,000.00

32) acquired last year acquired this year total

Inventory sold, at BP 165,000.00 75,000.00 240,000.00
Cost of Sale:
Total inventory 240,000.00 150,000.00 390,000.00
Multiply: 0.55 1/3 -
Inventory sold during the year, at cost 132,000.00 50,000.00 182,000.00
Mark-up/Adjustment on net income by HO 33,000.00 25,000.00 58,000.00

33) Sales 169,000.00

Sales returns (3,750.00)
Purchases from other sources, at BP (7 500 * 1.2) (9,000.00)
Inventory sold, at SP 156,250.00
Divide: 1.25
Inventory sold, at BP 125,000.00

Inventory, Jan 1 at BP 165,000.00

Shipments, January to March 27 at BP 100,000.00
Inventory sold, at BP (125,000.00)
Ending inventory- destroyed by fire, at BP 140,000.00
Multiply: 0.80
Cost of merchandise destroyed by fire 112,000.00

34) Inventory, Jan 1 at BP 165,000.00

Multiply: 0.80
Cost of January 1, branch inventory 132,000.00

35) Gross profit as far as branch is concerned:

Sales 177,000.00
Inventory sold, at BP (21 000 +150 000 - 45 000) (126,000.00) 51,000.00
Realizzed profit/ mark-up:
Realized profit from beginning inventory sold (21 000 -13 500) 7,500.00
Realized profit from shipments sold [(150 000 -120 000) * 0.7] 21,000.00 28,500.00
Freight:
from beginning of the year inventory (2,250.00)
from shipments made during the year (7 200 * 0.7) (5,040.00) (7,290.00)
Correct gross profit 72,210.00

36) Shipment to branch 150,000.00

 Multiply: 0.60
Reported amount of 60% merchandise in the books of branch 90,000.00

37) Debit the bayview branch account for the 2 000 of branch profit and credit the bayview branch profit account
for 2 000 and combine the 5 000 of branch inventory with its own ending inventory
(ref: Advanced Accounting by Baysa- page 370)

38) Beginning inventory-total 120,000.00

Beginning inventory from HO* (96,000.00)
Beginning inventory from other suppliers 24,000.00

*Unrealized profit in branch inventory 28,800.00

Allow for unrealized profit- shipments (64 000 * 20%) 12,800.00
Allowance for unrealized profit- beginning inventory 16,000.00
Divide: 0.20
Beginning inventory from HO, at cost 80,000.00
Multiply: 1.20
Beginning inventory from HO, at BP 96,000.00

39) Year-end inventory for the branch 80,000.00

Multiply: (100% - 16%) 0.84
Inventory from HO 67,200.00
Divide: 1.20
Cost of inventory from HO 56,000.00
Multiply: 0.20
Adjusted balance of unrealized profit 11,200.00

40) Allowance for overvaluation of BI 10,800.00

Allowance for overvaluation from shipments to branch (4,800.00)
Allowance for overvaluation of beginning inventory 6,000.00
Divide: 0.20
Cost of inventory 30,000.00
Multiply: 1.20
Beginning inventory of branch from HO 36,000.00

41) HO books Branch books

Sales 180,000.00 90,000.00
Inventory sold, at BP * (56,000.00) (60,300.00)
Gross profit 124,000.00 29,700.00
Operating Expense (42,000.00) (18,000.00)
Net income 82,000.00 11,700.00

*Inventory sold, at BP:

from home office: 60 000 + 80 000 - 24 000 - 60 000 = 56 000
from branch: 45 000 + 28 800 + 16 500 - 30 000 = 60 300

42) "branch" "home office"

HO books Branch books
Unadjusted balances 340,000.00 319,000.00
Adjstments:
1 Remittance of branch to HO, received 1/5/16 (15,000.00)
2 Home office allocated gen exp to the branch not recorded 5,000.00
3 Branch paid adv to be allocated bet stores not yet rec by HO (1,000.00)
Adjusted balances 324,000.00 324,000.00
43) Balance, 4/30 15,000.00
Shipment at cost 32,000.00
Exp allocated from HO 14,500.00
HO note collected with interest 2,100.00
Cash remittance (42,000.00)
Merchandise returned to HO (3,000.00)
Machine charged to HO (5,000.00)
Unadjusted balance- HO account 13,600.00

44) Unadjusted balance- HO account 13,600.00

Adjustments:
Error in record to expense allocation (15 400 -14 500) 900.00
Goods in transit (37 000 - 32000) 5,000.00
Adjusted balance-HO account 19,500.00

45) Shipment to branch 900,000.00

Mark-up on shipment during the year 225,000.00
Shipment from home office-total, at BP 1,125,000.00
Shipment from home office-on hand, at BP 1,062,500.00
Goods in transit, at BP 62,500.00
Divide: 1.25
Goods in transit, at cost 50,000.00

46) Sales (2 000 000 + 1 900 000) 3,900,000.00

Cost of sale:
Beginning inventory ( 350 000 + 180 000) 530,000.00
Purchases (2 100 000 + 450 000) 2,550,000.00
Ending inventory (580 000 + 200 000) (780,000.00) 2,300,000.00
Gross profit 1,600,000.00
Expenses (320 000 + 250 000) 570,000.00
Consolidated NI 1,030,000.00

47) Inventory, Jan1 120,000.00

Multiply: (100% - 30%) 0.70
Inventory from HO 84,000.00
Divide: 1.40
Cost of beginning inventory 60,000.00
Multiply: 0.40
Mark-up on beginning inventory 24,000.00

Allowance for overvaluation of branch inventory-total 624,000.00

Allowance for overvaluation of BI -beg 24,000.00
Allowance for overvaluation of BI from shipments 600,000.00
Divide: 0.40
Cost of shipment from HO 1,500,000.00

48) Inventory, Dec 31 130,000.00

Allowance for overvaluation of BI-adjusted 30,000.00
Ending inventory of the branch, at cost 100,000.00

49) Branch books

HO books
at cost (100%) at BP (130%)
Sales 750,000.00 450,000.00 450,000.00
Cost of sale:
Beginning inventory* 12,500.00 30,625.00 36,250.00
 Purchases 562,500.00 125,000.00 125,000.00
Shipments (90,625.00) 90,625.00 117,812.50
Goods in transit* (18,125.00) (23,562.50)
Ending inventory (75,000.00)
from outsiders (17,312.50)
(26,250.00)
from HO* (6,875.00)
Total 409,375.00 203,937.50 229,250.00
Gross profit 340,625.00 246,062.50 220,750.00
Operating expense (181,250.00) (68,750.00)
Net income 159,375.00 177,312.50
Combined net income 336687.50

*Branch inventory allowance-beg. : 32812.5 - (90 625 * 0.3) = 5625

Beginning inventory at cost: 36 250 - 5 625 = 30 625
Ending inventory from HO at cost: (26 250 - 17 312.50) / 1.3 = 6875

50) "home office"

Branch books
Unadjusted balance 292,050.00
Adjustments:
1 Merchandise in transit not recognized in branch books 18,450.00
2 Collection of home office accounts receivable (75,000.00)
3 Error in recording branch net income (2,700.00)
4 Return of merchandise on HO 19,200.00
Adjusted balance 252,000.00

50) Cost Branch 6,800.00

Freight 200.00
Shipment to West branch 5,500.00
Unrealized profit- branch inventory 1,100.00