ABC Company operates a branch. Operating data for the home office and the branch for 2021 are as follows: (see image below) Determine the Branch December 31, 2021 Inventory at cost.Using the same information , determine combined net income (loss) of the home office and the branch for the year 2021. Home OfficeBranchSalesP 256,000P 78,500Purchases from outsiders210,00020,000Shipments to branch:Cost to home officeBilling price to branchExpensesInventories, January 1, 2008:Home office acquired from outsiders, at cost30,00040,00012,50060,00080,000Branch:Acquired from outsiders, at costAcquired from home office, at billed price(which averaged 22 % above cost)Inventories, December 31, 2008:Home Office, acquired from outsiders, at cost7,50024,50055,000Branch:Acquired from outsiders, at costAcquired from home office, at 2008 billedprice5,50026,000

Mark up on purchase = (40,000 - 30,000)/40,000 = 25% of Billing price Inventory at cost on…

Home Office Branch P 256,000 P 78,500 20,000 Sales Purchases from outsiders Shipments to branch: Cost to home office 210,000 30,000 Billing price to branch Expenses Inventories, January 1, 2008: 40,000 12,500 60,000 Home office acquired from outsiders, at cost 80,000 Branch: 7,500 Acquired from outsiders, at cost Acquired from home office, at billed price (which averaged 22 ½ above cost) Inventories, December 31, 2008: Home Office, acquired from outsiders, at cost Branch: 24,500 55,000 Acquired from outsiders, at cost Acquired from home office, at 2008 billed price 5,500 26,000

Home Office Branch P 256,000 P 78,500 20,000 Sales Purchases from outsiders Shipments to branch: Cost to home office 210,000 30,000 Billing price to branch Expenses Inventories, January 1, 2008: 40,000 12,500 60,000 Home office acquired from outsiders, at cost 80,000 Branch: 7,500 Acquired from outsiders, at cost Acquired from home office, at billed price (which averaged 22 ½ above cost) Inventories, December 31, 2008: Home Office, acquired from outsiders, at cost Branch: 24,500 55,000 Acquired from outsiders, at cost Acquired from home office, at 2008 billed price 5,500 26,000

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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Question

ABC Company operates a branch. Operating data for the home office and the branch for 2021 are as follows: (see image below) Determine the Branch December 31, 2021 Inventory at cost. Using the same information , determine combined net income (loss) of the home office and the branch for the year 2021.

Home Office
Branch
Sales
P 256,000
P 78,500
Purchases from outsiders
210,000
20,000
Shipments to branch:
Cost to home office
Billing price to branch
Expenses
Inventories, January 1, 2008:
Home office acquired from outsiders, at cost
30,000
40,000
12,500
60,000
80,000
Branch:
Acquired from outsiders, at cost
Acquired from home office, at billed price
(which averaged 22 % above cost)
Inventories, December 31, 2008:
Home Office, acquired from outsiders, at cost
7,500
24,500
55,000
Branch:
Acquired from outsiders, at cost
Acquired from home office, at 2008 billed
price
5,500
26,000

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