10 problem 12 5 1 oro company working paper for

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Problem 12-5 (1) Oro Company Working Paper for Combined Statements Year Ended December 31, 2008 Income Home Eliminations Statements Balance Office Branch Debit Credit Dr (CR) Sheet Debits Cash 63,000 21,900 84,900 Notes receivable 10,500 10,500 Accounts receivable (net) 120,600 55,950 176,550 Inventories 143,700 36,300 (2)135,000 45,000 Furniture & fixtures (net) 72,150 72,150 Investment in Branch 124,050 (1)124,050 Cost of goods sold 300,750 128,700 (2)135,000 564,050 Operating expenses 104,250 32,850 137,100 Totals 939,000 275,700 389,100 Credits Accounts payable 61,500 61,500 Common stock 300,000 300,000 Retained earnings 37,500 37,500 Home Office 124,050 (1)124,050 Sales 540,000 151,650 (691,650) Totals 939,000 275,700 289,050 289,050 Net Income 9,900 (9,900) 389,100 (1) To eliminate shipments (2) To eliminate reciprocal accounts. Closing Entries 2. Branch Books 3. Home Office Books Sales 151,650 Income Summary 9,900 Cost of goods sold 128,700 Operating expenses 32,850 11
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Home Office 9,900 Branch loss 9,900 Income summary 9,900 Investment in Branch 9,900 Income summary 9,900 Branch loss 9,900 Problem 12-6 a. Investment in Branch account (Home Office Books) Unadjusted balance P138,200 Error in recording cash transfer, April 8 ( 45,000) Cash transfer recorded in subsequent year, Dec. 31 ( 15,000) Error in recording allocated depreciation, Dec. 31 6,000 Adjusted balance P 84,200 Home Office account (Branch Books) Unadjusted balance P(93,000) Error in recording salary allocation, April 5 ( 200) Error in recording inventory transfer, July 6 12,000 Unrecorded allocated depreciation, Dec. 31 ( 3,000) Adjusted balance P(84,200) b. Adjusting Entries Home Office Books Branch Books Other income 45,000 Salary expense 200 Investment in branch – Home office 200 Rizal 45,000 Cash 15,000 Home office 12,000 Investment in branch- Shipments from HO 12,000 Rizal 15,000 Investment in branch 6,000 Depreciation expense 3,000 Accumulated dep’n 6,000 Home office 3,000 Problem 12-7 a. Investment in Branch account (Home Office Books) Unadjusted balance, Dec. 31 P166,400 Cash remittance in transit (30,000) Merchandise returns in transit (12,000 ) Adjusted balance, Dec. 31 P124,400 Home Office account (Branch Books) Unadjusted balance, Dec. 31 P103,200 Error in recording expense 7,200 Shipment in transit 24,000 12
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Supplies charged to branch 8,000 Collection of branch receivable ( 18,000 ) Adjusted balance, Dec. 31 P124,400 b. Adjusting Entries Home Office Books Branch Books Cash 30,000 Shipment from HO 24,000 Shipment to branch 12,000 Supplies 8,000 Investment in branch 42,000 Expenses 7,200 Accounts receivable 18,000 Home office 21,200 Problem 12-8 (1) Reconciliation Statement ( Home Office Books) (Branch Books) Investment in Branch Home Office Unadjusted balances, 1/31 P59,720 P 43,268 Advertising charged to branch 480 Home office AR collected by branch 600 Shipment in transit ( 180) Error in recording receipt of merchandise ( 432) Understatement of depreciation (12,800) Remittance in transit, 1/31 P47,088 P 47,088 (2) Adjusting Entries Home Office Books Branch Books Retained earnings 432 Advertising 480 Cash 12,800 Shipments from HO 3,520 Accounts receivable 600 Shipment from HO 180 Investment in branch 12,632 Home office 3,820 Problem 12-9 (1) Branch Books Adjusting Entries Shipment from home office 57,600 Operating expenses (P4,200 + P3,900) 8,100 Home office 65,700 Closing Entries Sales 778,200 Inventory, 12/31 (P64,580 + P57,600) 122,180 Inventory, 1/1 47,800 Shipment from HO (P623,200 + P57,600) 680,800 Operating expenses 54,790 Income summary 116,990 13
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Income summary 116,990 Home office 116,900 (2) Home Office Books Accounts receivable 470 Investment in branch 330 Cash (P20,000 + P19,200) 800 Investment in branch 116,990
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