CPA REVIEW SCHOOL OF THE PHILIPPINES

MANILA
PRACTICAL ACCOUNTING PROBLEMS II
GUERRERO / GERMAN
SIY / DE JESUS / LIM / FERRER

HOME OFFICE AND BRANCH ACCOUNTING

PROBLEM 1
How much net income would be reported by the BGC agency on December 31, 2013?
A.
B.
C.
D.

P4,471,250
P4,135,250
P5,535,250
P3,855,250

P1
Sales
Sales Discounts
Net sales
COS
GP
OPEX
Depreciation (4.2M x 80% x 7/12)
Net Income

27,562,500
(616,000)
26,946,500
(19,293,750)
7,652,750
(1,837,500)
(1,960,000)
3,855,250

PROBLEM 2
By what amount will the Allowance for Unrealized Gross Margin in Branch Inventory account be debited at
the end of the year?
A.
B.
C.
D.

P12,250,000
P10,825,000
P1,185,000
P2,610,000

P2

Beg
Ship
Total
End.
COGS/RA

100%
Cost
800,000
9,000,000
9,800,000
1,140,000
8,660,000

125%
MU
1,000,000
11,250,000
12,250,000
1,425,000
10,825,000

225%
BP
1,800,000
20,250,000
22,050,000
2,565,000
19,485,000

PROBLEM 3
How much is the total goods available for sale of the branch from the home office?
A.
B.
C.
D.

P5,308,335
P6,337,500
P8,090,000
P6,100,000

P3

Beg
Ship
Total

Cost
2,375,000
2,500,000
4,875,000

MU
475,000
750,000
1,225,000

BP
2,850,000
3,250,000
6,100,000
D

PROBLEM 4
Compute for the following:
Unadjusted balance of Investment in Tacloban account?
A.
B.
C.
D.

P1,142,800
P1,044,800
P1,071,600
P1,058,200

Net adjustment in the Home Office Current account. Indicate whether net debit or net credit.
A.
B.
C.
D.

P946,400 net debit

P946,400 net credit
P996,400 net debit
P996,400 net credit

P4

Beg. Balance
Branch equipment
Shipments
Cash transfer
Collection of Br. AR
Alloc. Of Exp
Unadjusted balance
Correction of dr. For Equipment
Recording of equipment from HO
Understatement of shipments
Understatement of cash transfer
Collection of Br. AR
Allocation of expenses
Collection of HO AR
Cash remittance from Br.
Return of shipments
Adjusted balances

BC
264,900
420,000
320,000
53,000
(25,000)
38,700
1,071,600

HOC

111,800
420,000
420,000
90,000
2,700
(25,000)
38,700

113,600
(78,000)
(49,000)
1,058,200

1,058,200

Net Adjusment

946,400

PROBLEM 5
What is the unadjusted balance of the home office-current account in the books of Cebu branch on
December 31, 2013?
A.
B.
C.
D.

P2,855,940
P2,768,940
P2,781,900
P2,754,420

P5
BC

HOC

Unadjusted balance
Mark up on shipments
Correction and allocation of RE
Write off of AR
Collection of HO AR

3,132,660

2,768,940
87,000
216,000

(60,720)
317,520

317,520

Adjusted balances

3,389,460

3,389,460

PROBLEM 6
Compute for the following:
Adjusted balance of Investment in Baguio account
A.
B.
C.
D.

P72,550
P66,800
P86,850
P103,950

Adjusted balance of Investment in Davao account

A.
B.
C.
D.

P181,450
P182,550
P175,700
P145,400

Unadjusted balance of Home Office Current account in Baguios books

A.
B.
C.
D.

P52,150
P87,200
P107,250
P92,950

Unadjusted balance of Home Office Current account in Davaos books

A.
B.
C.
D.

P236,250
P122,000
P115,150
P84,850

P6
Unadjusted balance
Inter cash
Inter shipments
Inter collections
Allocation
Cash remittance
Return of Shipments
Adjusted balances

Cost of shipments
Freight in
Freight paid
Net Amount

Baguio
186,500
(74,000)
(31,400)
5,750

Davao
84,000
74,000
30,300
(5,750)

BHO
92,950

11,000

DHO
115,150
27,000
30,300
(5,750)
9,000

72,550

175,700

(31,400)

(14,300)
(6,850)
72,550

175,700

Baguio
28,900
2,500

Davao
28,900
5,000
3,600

31,400

30,300

PROBLEM 7
How much is the adjusted balance of the Branch Current account on December 31, 2013 before the necessary
closing entries were made?
A. P701,718
B. P659,238
C. P623,238
D. P665,718
What is the amount of adjustment in the Allowance for Overvaluation of Branch Inventory account?
A. P56,700
B. P49,080
C. P14,700
D. P42,000
How much is the net income of Ortigas branch that will be reported in the combined income statement of The
Makati Company?
A. P236,250
B. P208,950
C. P194,250
D. P239,130
What is the amount of the Home Office Current account that will be reported in the books of Ortigas
branch after closing entries are made?
A. P856,668
B. P895,488
C. P856,368
D. P853,488
P7

Unadjusted balance
Equipment purchased for branch
Cash remitance

BC
656,238
36,000
(33,000)

Adjusted balances before closing

659,238

21,300
35,400
56,700
14,700
42,000

Beg. Allow.
Allow on shipment
Total allow.
Less: Required allow.
Adjustment or realized allow.

Unadjusted NI
Depreciation on Equipment
Allocated expense
Realized allow.
True Net income/ Unadjusted NI

HO
197,730
(2,880)
(600)
42,000
236,250

Adjusted balance of HO before NI

NI branch point of view
Home office current after closing

659,238
194,250
853,488

BR.
197,730
(2,880)
(600)
194,250