1271 31 Income Summary 2374 Retained Earnings 2374 Problem VI 1 Branch Current

1271 31 income summary 2374 retained earnings 2374

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1,271 31 Income Summary …………………………………………… 2,374 Retained Earnings …………………………………. 2,374 Problem VI 1. Branch Current H. Office Current Unadjusted balance, 12/31/20x4 P 44,000 P 9,000 Add (Deduct): Adjustments 1 Cash in transit ( 10,000 ) 2. Merchandise in transit 10,000 3. Branch expenses paid by home office 12,000 4. Cash in transit from home office ______ _ 3,000 Adjusted balance, 12/31/20x4 P 34,000 P34,000 2. Refer to PDF Copy of the Worsheet 3. Combined Income Statement Sales [(P350,000 – P105,000) + P150,000) ……… ....................................................... P395,000 Less: Cost of goods sold [(P220,000 – P84,000) +
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(P93,000 + P3,600 – P21,000 – P1,200)] ……………………………………. 210,400 Gross profit .............................................................................................................. ..... P184,600 Operating expenses (P70,000 + P41,000 + P12,000) ................................................ 123,000 Net income ........................................................................................................... ........ P 61,600 Problem VII (1) PAXTON CO. Income Statement for Dayton Branch For Year Ended December 31, 20x5 Sales .............................................................................................................. ................ P315,000 Cost of goods sold: Merchandise inventory, January 1, 20x5 ................................... P 44,500 Shipments from home office ...................................................... 252,000 Merchandise available for sale ................................................. P296,500 Less: Merchandise Inventory, December 31, 20x5 .................. 58,500 238,000 Gross profit .............................................................................................................. ... P 77,000 Operating expenses ................................................................................................. 101,500
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Net loss ................................................................................................................. ...... P 24,500 PAXTON CO. Income Statement for Cincinnati Home Office For Year Ended December 31, 20x5 Sales .............................................................................................................. ................ P1,060,000 Cost of goods sold: Merchandise inventory, January 1, 20x5 ................................... P115,000 Shipments from home office ...................................................... 820,000 Merchandise available for sale ................................................. P935,000 Less: Shipments to branch .......................................................... 210,000 Merchandise available for own sales ....................................... P725,000 Less: Merchandise Inventory, December 31, 20x5 .................. 142,500 582,500 Gross profit .............................................................................................................. .... P477,500 Expenses ........................................................................................................ .............. 382,000 Net income from own operations ............................................................................ P 95,500 Add branch net income ........................................................................................... 16,650
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Total income ........................................................................................................... .... P112,150 (2) PAXTON CO. Combined Income Statement for Home Office and Branch For Year Ended December 31, 20x5 Sales .............................................................................................................. ................ P1,375,000 Cost of goods sold: Merchandise inventory, January 1, 20x5 ................................... P 150,600 Purchases ...................................................................................... 820,000 Merchandise available for sale ................................................. P970,600 Less: Merchandise Inventory, December 31, 20x5 .................. 191,250 779,350 Gross profit .............................................................................................................. ...... P595,650 Operating expenses .................................................................................................... 483,500 Net income ........................................................................................................... ........ P112,150 (3) Merchandise Inventory, December 31 ................................................................ 58,500 Sales .............................................................................................................. ............ 315,000
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Income Summary ............................................................................................ 373,500 Income Summary ....................................................................................................... .. 398,000 Merchandise Inventory, January 1 ................................................................ 44,500 Shipments from Home Office ......................................................................... 252,000 Operating expenses ........................................................................................ 101,500 Home Office ............................................................................................................. .. 24,500 Income Summary .......................................................................................... 24,500 (4) Branch Income Summary ........................................................................................ 24,500 Branch Current ..................................................................................................... 24,500 Unrealized Intercompany Inventory Profit ............................................................... 41,150 Branch Income Summary .................................................................................... 41,150 Calculation of unrealized profit adjustment:
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Branch inventory, January 1, acquired from home office at billed price ...................................................................................... P 44,500 Less: Cost of inventory (P44,500/1.25) ......................................................... 35,600 Unrealized Intercompany Inventory Profit Jan. 1 ....................................... P 8,900 Add: Increase in unrealized profit for shipments made during year, billed price of goods, P252,000, cost of goods, P210,000 .................................................... 42,000 P 50,900 Deduct balance to remain in unrealized profit account: Branch inventory, December 31, acquired from home office ....................................... P 58,500 Less: Cost of inventory to home office, P58,500/1.20 ................................................................ 48,750 9,750 Reduction in unrealized profit account- adjustment to branch income for overstatement of cost of goods sold .................................................................. 41,150 Branch Income Summary ........................................................................................... 16,650 Income Summary ............................................................................................ 16,650 Merchandise Inventory, December 31 ...................................................................... 142,500 Sales .............................................................................................................. ................. 1,060,000
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Shipments to Branch .................................................................................................... 210,000 Income Summary .............................................................................................
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