HOME OFFICE AND BRANCH ACCOUNTING REGULAR TRANSACTIONS January 1, 2016, the BAL Company opened the Arren Branch in neighboring city. The statement of financial position for the home office on January 1 and a summary of the transactions for the home office and branch for 2016 are given below. Taxes are ignored.

Assets

Cash

P296,500

Accounts receivable

138,250

Merchandise Inventory

200,600

Prepaid expenses

9,000

Equipment
P100,000

Less: Accumulated Depreciation
22,000
78,000

Total Assets

P722,350

Liabilities and Shareholder’s Equity
Accrued expensesP6,250
Accounts payable114,000
Share Capital, P20 par, ordinary250,000
Retained Earnings352,100
Total Liabilities and Shareholder’s equityP722,350

Branch Transactions
Cash received from the home office, P212,500
Merchandise received from the home office, P251,000
Sales on account, P400,000
Purchases on account, P112,500
Collections on account deposited to the credit of the home office, P267,000.
Payment on accounts, P61,250
Purchases of equipment for cash, P40,000.
Expenses paid, P90,000.

Adjusting data on December 31: Depreciation, P3,250.
Merchandise inventory end,
P
117,500

Prepaid expenses,
P
3,750

Accrued expenses
P
1,500

Home Office Transactions
Transfer of cash to branch, P212,500
Transfer of merchandise to branch (billing at cost), P251,000. The company uses the periodic system
Sales on account, P525,000
Purchases on account, P612,500
Collections on account, P568,000
Payments on account, P620,000
Expenses paid, P133,000

Cash received from the branch, P267,000
Dividends declared and paid immediately, P50,000.

Adjusting entries on December 31: Depreciation for the year, P5,900 Merchandise inventory end, P242,500. Prepaid expenses, P10,250.
Accrued expenses, P6,750.
Instructions: Prepare journal entries, adjusting journal entries, separate financial statements and combined financial statement for the home office and branch.

The following records were taken from the books of the Company and its branch on December 31, 2016:
Home Office BooksBranch Books
Sales
P
920,000
P
800,000

Shipments to branch

600,000

Beginning inventory

96,000

64,000

Purchases

1,200,000

240,000

Shipments from home office

750,000

Allowance for overvaluation

158,000

Ending inventory

112,000

82,800

Expenses

40,000

20,000

Ending inventory of the branch includes P 34,800 acquired from outsiders.
Compute for the true net income of the branch
Ending balance and balance before adjustment of Unrealized Profit on Branch Inventory
Combined net income

Beginning and ending inventory at cost presented in the combined financial statements

The following records were taken from the books of the Company and its branch on December 31, 2016:
Home Office BooksBranch Books
Sales
P
1,060,000
P
315,000

Shipments to branch

210,000

Beginning inventory

115,000

44,500

Purchases

820,000

Shipments from home office

252,000

Ending inventory

142,500

58,500

Expenses

382,000

101,500

In 2016, home office billed the branch at 120% of cost which was lower by 5% than last year’s.
What is the combined net income?
Compute for the total beginning and ending inventory at cost.
What is the balance of the allowance for overvaluation of inventory of the branch after closing entries have been made?

The following records were taken from the books of the Company and its branch on December 31, 2016:

Home Office Books
Branch Books

SalesP 512,000
P 157,000

Purchases420,000
40,000

Shipment to branch60,000

Shipment from home office
80,000

Expenses120,000
25,000

Beginning inventory

Home office160,000

Branch:

-From outsiders
15,000

-From home office

Billed at 22.5% above cost
49,000

Ending inventory

Home office
110,000

Branch:

-From outsiders

11,000

-From home office

52,000

Compute​