At the end of 20XX, the following records were taken form the books of the home office and the branch.(Branch Books)Home Office12/01 Cash remitted to home office12/28 Cash remitted to home office12/28 Merchandise returned to homeoffice01/01 Balance12/04 Shipments to branch12/28 Expense Allocation12/28 Shipments to branch12/28 Supplies purchased for branch andshipped directly to branchBalance 166,40080,00030,00012,00001/01 Balance12/05 Shipments from Home Office12/28 Expenses from Home Office(Home Office Books)Investment in Branch52,40024,000Balance 103,20060,000 12/03 Cash received from branch120,000 12/28 Collection from branch customer8,00060,000120,00045,20080,00018,000Except for the error by the branch in recording its share of allocated expenses, all difference are timing differences.Required:1. Compute the correct balance of reciprocal accounts.2. Prepare the necessary entries to bring the reciprocal accounts into balance for a working paper used to prepare the homeoffice's combined financial statements.

Introduction: Reciprocal: Reciprocal account is an arrangement under the this one credit institution…

01/01 Balance 12/04 Shipments to branch 12/28 Expense Allocation 12/28 Shipments to branch 12/28 Supplies purchased for branch and shipped directly to branch Balance 166,400 60,000 120,000 52,400 24,000 8,000 12/03 Cash received from branch 12/28 Collection from branch customer 80,000 18,000 Except for the error by the branch in recording its share of allocated expenses, all difference are timing differences. Required: 1. Compute the correct balance of reciprocal accounts. 2. Prepare the necessary entries to bring the reciprocal accounts into balance for a working paper used to prepare the home office's combined financial statements.

01/01 Balance 12/04 Shipments to branch 12/28 Expense Allocation 12/28 Shipments to branch 12/28 Supplies purchased for branch and shipped directly to branch Balance 166,400 60,000 120,000 52,400 24,000 8,000 12/03 Cash received from branch 12/28 Collection from branch customer 80,000 18,000 Except for the error by the branch in recording its share of allocated expenses, all difference are timing differences. Required: 1. Compute the correct balance of reciprocal accounts. 2. Prepare the necessary entries to bring the reciprocal accounts into balance for a working paper used to prepare the home office's combined financial statements.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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