Exercise No. 5On January 4, 2022, Hope Company opened its first branch with instructions to its branch manager that the branch performs the functions of granting credit, billing customers, accounting forreceivables, and making cash collections. The branch pays its operating expenses by checks drawn on its bank account. The branch obtains its merchandise solely from the home office; billingfor the shipments are at cost to the home office.The adjusted trial balances of the home office and the branch on December 31, 2022 are as follows:Hope CorporationAdjusted Trial BalancesDecember 31, 2022CashNotes ReceivableAccounts Receivable (net)InventoriesFurniture and Equipment (net)Branch CurrentAccounts PayableShare Capital, P2 parHome Office CurrentRetained Earnings, 12/31SalesCosts of Goods SoldHope CorporationCombined Working PaperFor the year ended December 31, 2022DebitsCashNotes ReceivableAccounts Receivable (net)InventoriesFurniture and Equipment (net)Investment in BranchCosts of Goods SoldOperating ExpensesTotalCreditsAccounts PayableShare CapitalRetained EarningsHome OfficeSalesTotal?Income Summary???128,700.0032,850.00Operating ExpensesTotals275,700.00275,700.00The physical inventories on December 31, 2022 are in agreement with the perpetual records of the home office and the branch. The shipment to branch during the year amounts to P135,000.Required:1. Prepare the working paper for the combined financial statements of the home office and the branch.2. Prepare the closing journal entries on December 31, 20XX for the branch.3. Prepare the closing journal entries on December 31, 20XX pertaining to branch operations for the home office.1. Combined Working PaperIncome Summary3. Closing Entries - Home Office???????Income Summary?????Net Income or (Loss) to Statement of Financial Position??Home OfficeDr63,000.0010,500.00120,600.00143,700.0072,150.00124,050.00?300,750.00104,250.00939,000.00Home Officea. To eliminate shipments to branch and shipments from home office.b. To eliminate reciprocal accounts.2. Closing Entries - BranchAdjusted Trial BalanceBranch9,900.00??9,900.00????Cr61,500.00300,000.00?37,500.00540,000.00?939,000.009,900.00b.?a. ??BranchDr21,900.0055,950.0036,300.00Drb. ?Cr124,050.00Eliminationsa. ?151,650.00Cr??Combined Income StatementDrCr(9,900.00)???Combined Statement of FinancialPosition????Dr??Cr(9,900.00)

SOLUTION:- HOPE COMPANY WORKING PAPER FOR COMBINED STATEMENTS FOR THE YEAR ENDED DECEMBER…

Exercise No. 5 On January 4, 2022, Hope Company opened its first branch with instructions to its branch manager that the branch performs the functions of granting credit, billing customers, accounting for receivables, and making cash collections. The branch pays its operating expenses by checks drawn on its bank account. The branch obtains its merchandise solely from the home office; billing for the shipments are at cost to the home office. The adjusted trial balances of the home office and the branch on December 31, 2022 are as follows: Hope Corporation Adjusted Trial Balances December 31, 2022 Cash Notes Receivable Hope Corporation Combined Working Paper For the year ended December 31, 2022 Debits Cash Notes Receivable Accounts Receivable (net) Inventories Furniture and Equipment (net) Investment in Branch Costs of Goods Sold Operating Expenses Total Credits Accounts Payable Share Capital Accounts Receivable (net) Inventories Furniture and Equipment (net) Branch Current Accounts Payable Share Capital, P2 par Home Office Current Retained Earnings, 12/31 Sales Costs of Goods Sold Operating Expenses Totals 275,700.00 The physical inventories on December 31, 2022 are in agreement with the perpetual records of the home office and the branch. The shipment to branch during the year amounts to P135,000. Retained Earnings Home Office Sales Total ? ? ? ? Home Office ? Dr 63,000.00 10,500.00 ? ? 120,600.00 143,700.00 72,150.00 124,050.00 300,750.00 104,250.00 939,000.00 Required: 1. Prepare the working paper for the combined financial statements of the home office and the branch. 2. Prepare the closing journal entries on December 31, 20XX for the branch. 3. Prepare the closing journal entries on December 31, 20XX pertaining to branch operations for the home office. 1. Combined Working Paper Home Office Cr Net Income or (Loss) to Statement of Financial Position ? 61,500.00 300,000.00 Adjusted Trial Balance Branch ? 37,500.00 540,000.00 128,700.00 32,850.00 939,000.00 275,700.00 a. To eliminate shipments to branch and shipments from home office. b. To eliminate reciprocal accounts. Branch Dr 21,900.00 b. ? a. ? 55,950.00 36,300.00 Dr Cr b. ? 124,050.00 Eliminations a. ? 151,650.00 Cr Combined Income Statement Cr Dr (9,900.00) ? ? Combined Statement of Financial Position ? Dr Cr (9,900.00)