During the first part of the current year, Luzon Inc. begins a branch operation in Iloilo...
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During the first part of the current year, Luzon Inc. begins a branch operation in Iloilo City. Equipment costing P 50,000is immediately sent to this site. In addition, inventory costing P 40,000 is transferred but at a price of P 60,000. Cash of P 10,000 also is conveyed to the branch. The following events occur thereafter: • The branch inventory from an outside party at a cost of P 30,000. A periodic inventory system is in use. • The home office pays P 10,000 on a building for the next eight months. The branch is notified of this payment. • Sales of P 90,000 are made. Cash of P 40,000 is collected immediately. The rest of the sales are made on account. The branch pays P 8,000 for advertising and another P 5,000 for salaries. The branch transfers P 10,000 in cash to the home office. The money is received and recorded. • AP 3,000 receivable is collected by the home office for the branch. The branch is notified of this collection. The building rented by the branch is occupied for four months. Required: a. Prepare Journal entries for the Branch and Home Office books. b. Prepare the Income statement of Iloilo branch. During the first part of the current year, Luzon Inc. begins a branch operation in Iloilo City. Equipment costing P 50,000is immediately sent to this site. In addition, inventory costing P 40,000 is transferred but at a price of P 60,000. Cash of P 10,000 also is conveyed to the branch. The following events occur thereafter: • The branch inventory from an outside party at a cost of P 30,000. A periodic inventory system is in use. • The home office pays P 10,000 on a building for the next eight months. The branch is notified of this payment. • Sales of P 90,000 are made. Cash of P 40,000 is collected immediately. The rest of the sales are made on account. The branch pays P 8,000 for advertising and another P 5,000 for salaries. The branch transfers P 10,000 in cash to the home office. The money is received and recorded. • AP 3,000 receivable is collected by the home office for the branch. The branch is notified of this collection. The building rented by the branch is occupied for four months. Required: a. Prepare Journal entries for the Branch and Home Office books. b. Prepare the Income statement of Iloilo branch.
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a Journal Entries Home Office Books To record transfer of equipment to branch Equipment Account Debi... View the full answer
Related Book For
Advanced Accounting
ISBN: 978-0077431808
10th edition
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
Posted Date:
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