Problem 3. Suma Company has several branches all over the country. At year end, December 31,...
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Problem 3. Suma Company has several branches all over the country. At year end, December 31, 2014 a reconciliation is being made. Before taking the effects of following information Galema Branch office has P157,900 in its "Home Office" account. a. The bookkeeper of the home office sent a voucher to Galema Branch charging the latter its share of common expenses from the home office. Galema received the voucher on January 4 of the next period and recorded the same on that date. The voucher amounted to P19,990 but the bookkeeper from the home office recorded it at P19,000. Accounts receivable of P3,560, originally reported by Galema was collected by Suma. The branch was not informed of the collection and that the cash is to be kept by the home office. The Suma Company sent goods to Galema Branch at cost of P4,300. Such inventories were still in transit as of year- end. Cash remittance of P12,000 from Galema was recorded by Suma's bookkeeper as coming from Galela. Merchandise returned by Galema to Suma was recorded by the latter at P12,655 instead of P12,310. Depreciation for equipment costing P56,900, with nil salvage value and depreciated over 10 years (straight line) was reflected in Galema's books at P5,870. The equipment is carried in the books of the home office. Replenishment of working fund of Galema Branch was recorded twice by the home office. Total expenses amounted to P3,000. The replenishment check was also in transit at year end to Galema. One shipment to Galema involving several merchandise was under-footed by P2,500 in the records of Suma. The related freight payment of P1,765, represented by Waybill No. 54378 was charged to Galela as the document was delivered to the latter. Galema did not learn of this Waybill until December 18, 2014 when it received a phone call informing it about an erroneous charge to Galela. Galema updated its records accordingly upon receipt of the phone call. On December 26, 2014, a voucher, representing Waybill No. 54378 charging Galema's account was received. The bookkeeper recorded the waybill at P1,675. Compute for the balance of Investment in Galema Branch, before any adjustments. b. Compute for the adjusted balances of the reciprocal accounts. 18 Problem 3. Suma Company has several branches all over the country. At year end, December 31, 2014 a reconciliation is being made. Before taking the effects of following information Galema Branch office has P157,900 in its "Home Office" account. a. The bookkeeper of the home office sent a voucher to Galema Branch charging the latter its share of common expenses from the home office. Galema received the voucher on January 4 of the next period and recorded the same on that date. The voucher amounted to P19,990 but the bookkeeper from the home office recorded it at P19,000. Accounts receivable of P3,560, originally reported by Galema was collected by Suma. The branch was not informed of the collection and that the cash is to be kept by the home office. The Suma Company sent goods to Galema Branch at cost of P4,300. Such inventories were still in transit as of year- end. Cash remittance of P12,000 from Galema was recorded by Suma's bookkeeper as coming from Galela. Merchandise returned by Galema to Suma was recorded by the latter at P12,655 instead of P12,310. Depreciation for equipment costing P56,900, with nil salvage value and depreciated over 10 years (straight line) was reflected in Galema's books at P5,870. The equipment is carried in the books of the home office. Replenishment of working fund of Galema Branch was recorded twice by the home office. Total expenses amounted to P3,000. The replenishment check was also in transit at year end to Galema. One shipment to Galema involving several merchandise was under-footed by P2,500 in the records of Suma. The related freight payment of P1,765, represented by Waybill No. 54378 was charged to Galela as the document was delivered to the latter. Galema did not learn of this Waybill until December 18, 2014 when it received a phone call informing it about an erroneous charge to Galela. Galema updated its records accordingly upon receipt of the phone call. On December 26, 2014, a voucher, representing Waybill No. 54378 charging Galema's account was received. The bookkeeper recorded the waybill at P1,675. Compute for the balance of Investment in Galema Branch, before any adjustments. b. Compute for the adjusted balances of the reciprocal accounts. 18
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Financial Accounting A User Perspective
ISBN: 978-0470676608
6th Canadian Edition
Authors: Robert E Hoskin, Maureen R Fizzell, Donald C Cherry
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