The “Shipment to Branch” account is added to the home office’s purchase account in determining home office cost of goods sold. S2: When performing the end-of-the-period reconciliation between the Home Office account on the branch’s books and the Branch Account on the home office’s books, shipments in transit from the branch back to the home office will be treated as an addition to the home office’s Branch Account.
The “Shipment to Branch” account is added to the home office’s purchase account in determining home office cost of goods sold. S2: When performing the end-of-the-period reconciliation between the Home Office account on the branch’s books and the Branch Account on the home office’s books, shipments in transit from the branch back to the home office will be treated as an addition to the home office’s Branch Account.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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S1: The “Shipment to Branch” account is added to the home office’s purchase
account in determining home office cost of goods sold. S2: When performing the end-of-the-period reconciliation between the Home Office account on the branch’s books and the Branch Account on the home office’s books, shipments in transit from the branch back to the home office will be treated as an addition to the home office’s Branch Account.
A. Both statements are correct.
B. Only S2 is correct.
C. Only S1 is correct.
D. Both statements are incorrect.
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