1. The home office ships merchandise to its branch at 120% of home office cost. 2....

  

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1. The home office ships merchandise to its branch at 120% of home office cost. 2. Inventories at December 31, 2003, are $70,000 for the home office and $60,000 for the branch. The branch inventory is at transfer prices. REQUIRED 1. Journalize the closing entries for the branch at December 31, 2003. 2. Journalize the closing entries for the home office at December 31, 2003. 3. Prepare a combined balance sheet for Tanker Corporation at December 31, 2003. 4. Prepare a combined income statement for Tanker Corporation for the year ended December 31, 2003. Home Office Branch Debits Other assets $ 530,000 50,000 200,000 500,000 $165,000 45,000 Inventories January 1, 2003 Branch Purchases Shipments from home office Expenses Dividends Total debits 240,000 50,000 120,000 100.000 $1.500.000 $500.000 Credits Other liabilities $ 25,000 $ 90,000 500,000 Capital stock Retained earnings Home office Unrealized profit in branch inventory Sales 100,000 175,000 10,000 537,500 200,000 300,000 Shipments to branch Branch profit Total credits 62.500 S1.500.000 $500.000 1. The home office ships merchandise to its branch at 120% of home office cost. 2. Inventories at December 31, 2003, are $70,000 for the home office and $60,000 for the branch. The branch inventory is at transfer prices. REQUIRED 1. Journalize the closing entries for the branch at December 31, 2003. 2. Journalize the closing entries for the home office at December 31, 2003. 3. Prepare a combined balance sheet for Tanker Corporation at December 31, 2003. 4. Prepare a combined income statement for Tanker Corporation for the year ended December 31, 2003. Home Office Branch Debits Other assets $ 530,000 50,000 200,000 500,000 $165,000 45,000 Inventories January 1, 2003 Branch Purchases Shipments from home office Expenses Dividends Total debits 240,000 50,000 120,000 100.000 $1.500.000 $500.000 Credits Other liabilities $ 25,000 $ 90,000 500,000 Capital stock Retained earnings Home office Unrealized profit in branch inventory Sales 100,000 175,000 10,000 537,500 200,000 300,000 Shipments to branch Branch profit Total credits 62.500 S1.500.000 $500.000

Answer rating: 100% (QA)

At 31 December 2003 Answer to part 1 Home Office Dr 175000 Unrecognised Profit Dr 40000 240000x2... View the full answer