Expenses 41445 net operating income p 20175 branch

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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, 2008 Sales P 99,000 Cost of sales 7
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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) Cebu Company – Home Office Balance Sheet December 31, 2008 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 Balance Sheet December 31, 2008 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 8
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4. Combined Financial Statements Cebu Company Combined Income Statement Year Ended December 31, 2008 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 Balance Sheet December 31, 2008 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 Problem 12-4 Branch Books Home Office Books (a) and (b) Closing Entries Sales 145,000 Sales 560,000 Inventory, 12/31 60,000 Inventory, 12/31 90,000 Inventory, 1/1 18,000 Shipments to branch 145,000 Shipments from HO 145,000 Inventory, 1/1 45,000 Expenses 20,000 Purchases 540,000 Income summary 23,000 Expenses 90,000 Income summary 120,000 9
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Income summary 22,000 Investment in branch 22,000 Home office 22,000 Branch income 22,000 Branch income 22,000 Income summary 22,000 Income summary 142,000 Retained earnings 142,000 © CG Corporation Combined Statement Working Paper Year Ended December 31, 2008 Eliminations Income Home Statement Balance Office Branch Debit Credit Dr (Cr) Sheet Debits Cash 36,000 7,000 43,000 Accounts receivable 54,000 29,000 83,000 Inventory, 1/1 45,000 18,000 63,000 Investment in branch 70,000 (2) 70,000 Equipment (net) 95,000 95,000 Purchases 540,000 540,000 Shipments from HO 145,000 (1)145,000 Expenses 90,000 20,000 110,000 Total debits 930,000 219,000 Inventory 12/31 (BS) 150,000 Total assets 371,000 Credits Accounts payable 27,000 4,000 31,000 Home Office 70,000 (2) 70,000 Capital stock 54,000 54,000 Retained earnings, 1/1 144,000 144,000 Sales 560,000 145,000 (705,000) Shipments to branch 145,000 (1)145,000 Total credits 930,000 219,000 Inventory, 12/31 (IS) 90,000 60,000 (150,000) 215,000 215,000 Net income 142,000 142,000 Total liabilities & equity 371,000 1. To eliminate shipments to branch and shipments from HO 2. To eliminate reciprocal accounts.
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