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    Cebu Company Answer Key

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    Marco
    This document shows adjusting and closing entries for the home office and branch books of Cebu Company. It then provides individual and combined financial statements for the company. The adjusting entries reconcile various accounts between the home office and branch books. The closing entries transfer revenue and expense accounts to retained earnings to prepare interim financial statements. The individual statements show the financial position and performance of the home office and branch separately, while the combined statements present the consolidated position and results of the entire company.

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    Cebu Company Answer Key

    Uploaded by

    Marco
    75 views4 pages
    This document shows adjusting and closing entries for the home office and branch books of Cebu Company. It then provides individual and combined financial statements for the company. The adjusting entries reconcile various accounts between the home office and branch books. The closing entries transfer revenue and expense accounts to retained earnings to prepare interim financial statements. The individual statements show the financial position and performance of the home office and branch separately, while the combined statements present the consolidated position and results of the entire company.

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    This document shows adjusting and closing entries for the home office and branch books of Cebu Company. It then provides individual and combined financial statements for the company. The adjusting entries reconcile various accounts between the home office and branch books. The closing entries transfer revenue and expense accounts to retained earnings to prepare interim financial statements. The individual statements show the financial position and performance of the home office and branch separately, while the combined statements present the consolidated position and results of the entire company.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    75 views4 pages

    Cebu Company Answer Key

    Uploaded by

    Marco
    This document shows adjusting and closing entries for the home office and branch books of Cebu Company. It then provides individual and combined financial statements for the company. The adjusting entries reconcile various accounts between the home office and branch books. The closing entries transfer revenue and expense accounts to retained earnings to prepare interim financial statements. The individual statements show the financial position and performance of the home office and branch separately, while the combined statements present the consolidated position and results of the entire company.

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    You are on page 1of 4

    Home Office Books Branch Books

    (1) Adjusting Entries

    a. Investment in branch 63,750 Cash 63,750


    Cash 63,750 Home office 63,750

    b. Investment in branch 75,300 Shipment from HO 75,300


    Shipment to branch 73,300 Home office 75,300

    c. Accounts receivable 157,500 Accounts receivable 99,000


    Sales 157,500 Sales 99,000

    d. Purchases 183,750 Purchases 33,750


    Accounts payable 183,750 Accounts payable 33,750

    e. Cash 170,400 Cash 80,100


    Accounts receivable 170,400 Accounts receivable 80,100

    Home office 80,100


    Cash 80,100

    f. Accounts payable 186,000 Accounts payable 18,375


    Cash 186,000 Cash 18,375

    g. Expenses 39,900 -
    Cash 39,900

    Furniture & fixtures – branch 12,000 Home office 12,000


    Investment in branch 12,000 Cash 12,000

    h. Cash 80,100 -
    Investment in branch 80,100

    Expenses 27,000
    Cash 27,000

    i. Retained earnings 15,000


    Cash 15.000

    (2) Adjusting Entries

    j. Expenses 1,770
    Acc. Depreciation 1,750

    k. Investment in branch 975 Expenses 975


    Acc. Dep’n – Br. F & F 975 Home office 975

    l. Prepaid expenses 375 Prepaid expenses 1,125


    Expenses 375 Expenses 1,125

    m. Expenses 150 Expenses 450


    Accrued expenses 150 Accrued expenses 450

    Closing Entries
    Home Office Books Branch Books

    n. Sales 157,500 Sales 99,000


    Shipments to branch 75,300 Merchandise inv., 12/31 35,250
    Merchandise inv., 12/31 72,750 Income summary 2,100
    Merchandise inv. 1/1 60,180 Purchases 33,750
    Purchases 183,750 Shipment from HO 75,300
    Expenses 41,445 Expenses 27,300
    Income summary 20,175

    o. Branch loss 2,100 Home office 2,100


    Investment in branch 2,100 Income summary 2,100

    p. Income summary 2,100


    Branch loss 2,100

    q. Income summary 18,075


    Retained earnings 18,075

    3. Individual Financial Statements

    Cebu Company – Home Office


    Income Statement
    Year Ended December 31, 2011

    Sales P157,500
    Cost of sales
    Merchandise inventory, 1/1 P 60,180
    Purchases 183,750
    Goods available for sale P243,930
    Shipment to branch ( 75,300)
    Goods available for own sale P168,630
    Merchandise inventory, 12/31 ( 72,750) 95,880
    Gross profit P 61,620
    Expenses 41,445
    Net operating income P 20,175
    Branch income (loss) ( 2,100)
    Net income P 18,075

    Cebu Company – Branch


    Income Statement
    Year Ended December 31, 2011

    Sales P 99,000
    Cost of sales
    Purchases P 33,750
    Shipments from home office 75,300
    Goods available for sale P109,050
    Merchandise inventory, 12/31 35,250 73,800
    Gross profit P 25,200
    Expenses 27,300
    Net income (loss) P( 2,100)

    Problem 10-3, continued


    Cebu Company – Home Office
    Statement of Financial Position
    December 31, 2011

    Assets
    Cash P 34,800
    Accounts receivable 28,575
    Merchandise inventory, 12/31 72,750
    Prepaid expenses 3,075
    Furniture and fixtures P30,000
    Less: Accumulated depreciation 8,370 21,630
    Branch furniture and fixtures P12,000
    Less: Accumulated depreciation 975 11,025
    Investment in branch 45,825
    Total assets P217,680

    Liabilities and Stockholders’ Equity


    Liabilities
    Accrued expenses P 2,025
    Accounts payable 31,950
    Total liabilities P 33,975
    Stockholders’ Equity
    Capital stock P 75,000
    Retained earnings 108,705 183,705
    Total liabilities and stockholders’ equity P217,680

    Cebu Company – Branch


    Statement of Financial Position
    December 31, 2011

    Assets
    Cash P 6,375
    Accounts receivable 18,000
    Merchandise inventory, 12/31 35,250
    Prepaid expenses 1,125
    Total assets P61,650

    Liabilities and Capital


    Accounts payable P 450
    Home office 15,375
    Total liabilities and capital P61,650

    Problem 12-3, continued:


    4. Combined Financial Statements
    Cebu Company
    Combined Income Statement
    Year Ended December 31, 2011

    Sales P256,500
    Cost of sales
    Merchandise inventory, 1/1 P 60,180
    Purchases 217,500
    Goods available for sale P277,680
    Merchandise inventory, 12/31 108,000 169,680
    Gross profit P 86,820
    Expenses 68,745
    Combined net income P 18,075

    Cebu Company
    Statement of Financial Position
    December 31, 2011

    Assets
    Cash P 41,175
    Accounts receivable 47,475
    Merchandise inventory 108,000
    Prepaid expenses 4,200
    Furniture and fixtures P42,000
    Less: accumulated depreciation 9,345 32,655
    Total assets P233,505
    Liabilities and Stockholders’ Equity
    Accrued expenses P 2,475
    Accounts payable 47,325
    Capital stock 75,000
    Retained earnings 108,705
    Total liabilities and stockholders’ equity P233,505

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