On January 2, 20XX, Elizabeth Company opened a new branch in a neighboring city. The balance sheet
Question:
On January 2, 20XX, Elizabeth Company opened a new branch in a neighboring city. The balance sheet of the home office on January 2, 20XX is given below:
Elizabeth Company (Home Office) | |||
Balance Sheet | |||
January 2, 20XX | |||
Assets | Liabilities and Shareholder's Equity | ||
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Cash | 88,950 | Accrued Expenses | 1,875 |
Accounts Receivable | 41,475 | Accounts Payable | 34,200 |
Merchandise Inventory | 60,180 | Share Capital, P20 par | 75,000 |
Prepaid Expenses | 2,700 | Retained Earnings | 105,630 |
Furnitures and Fixtures | 30,000 |
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Less: Accumulated Depreciation | (6,600) |
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Total Assets | 216,705 | Total Liabilities and Shareholders' Equity | 216,705 |
The following is the summary of the transactions of the home office and the branch for 20XX:
Home Office Transactions
- Transfers of cash to branch, P63,750.
- Transfers of merchandise to branch (billed at cost), P75,300.
- Sales on account, P157,500.
- Purchases on account, P183,750.
- Collection of accounts, P170,400.
- Payment of accounts, P186,000.
- Expenses paid, P39,900.
- Cash received from branch, P80,100.
- Dividends paid, P15,000.
Adjusting data on December 31:
Depreciation for the year, P1,770.
Merchandise Inventory, P72,750.
Prepaid Expenses, P3,075.
Accrued Expenses, P2,025.
Branch Transactions
- Cash received from home office, P63,750.
- Merchandise received from home office, P75,300.
- Sales on account, P99,000.
- Purchases on account, P33,750.
- Collections of accounts deposited to the credit of home office, P80,100.
- Payment of accounts, P18,375.
- Purchase of furniture and fixtures for cash, P12,000.
- Expenses paid, P27,000.
Adjusting data on December 31:
Depreciation for the year, P975.
Merchandise Inventory, P35,250.
Prepaid Expenses, P1,125.
Accrued Expenses, P450.
Required:
1. Prepare the journal entries to record the foregoing transactions for the branch and the home office.
2. Prepare the journal entries to adjust and close the books for branch and the home office.
3. Prepare individual statements for the branch and the home office.
5. Prepare the combined statements for the branch and the home office.