PROBLEM 1-17 (Home Office and Branch Accounting - Comprehensive Problem) Homer Corporation of Baguio City has...

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PROBLEM 1-17 (Home Office and Branch Accounting - Comprehensive Problem) Homer Corporation of Baguio City has operated a sales branch in Dagupan City, for a number of years. All merchandise shipped to Dagupan City is transferred at cost. Dagupan City Branch also purchases merchandise from outside suppliers. This merchandise is sold by Dagupan City Branch at a 25% mark-up based on invoice cost. Statements of financial position for Homer Corporation home office and its Dagupan City Branch on December 31, 2012 are as follows: 1:27 PM/ Assets Cash Accounts Receivable, net Merchandise Inventory Property, Plant and Equipment, net Investment in Dagupan City Branch Total Assets Liabilities and Equity Accounts Payable Other Liabilities Home Office Current Ordinary Share Accumulated Profits Home Office Branch P 25,000 P 11,000 42,000 23,000 20,000 16,000 70.000 43,000 P 200,000 P 50,000 P 14,000 P 5.000 10,000 2.000 43,000 150,000 26.000 P 200,000 P 50.000 Total Liabilities and Equity All property, plant and equipment records for Homer Corporation and Dagupan City Branch are maintained in the home office books. Half of the P16,000 branch inventory on December 31, 2012 was received from local suppliers, and the remaining half was received from the home office at cost. A summary of the transactions of Homer Company's home office and Dagupan City branch for 2013 follows: a. Homer Company's sales for 2013 were P281,750, of which P200,000 were from home office sales and P81,750 were sales made by the Dagupan City branch. All sales were on account. b. Home office and branch purchases on account for 2013 were P205,000 and P20.000, respectively. The home office shipped P40,000 of merchandise to Dagupan City branch. c. The home office collected P195,000 on account during 2013. and Dagupan City branch collected P79,750. d. Dagupan City branch transferred P55,000 cash to the home office during 2013. e. Payments on account were: home office, P210,000 and Dagupan City branch, P21,000. f. During 2013, the home office paid operating expenses of P20,000, and Dagupan City branch paid operating expenses of P2,000. Of the operating expenses paid by the home office, P1,000 was allocated to Dagupan City branch. g. Total depreciation for the year was P8,000, of which P1,500 was allocated to branch operations. 1:27 PM/ Year-end inventories are P25,000 for the home office, and P10,000 for Dagupan City branch, with half of the branch inventory consisting of merchandise acquired from the home office. REQUIREMENTS: 1. Prepare journal entries for the year 2013 in the books of the home office and the branch. 2. Prepare the adjusting and closing entries in the home office books and the closing entry in the books of the branch. 3. Prepare unadjusted trial balance of the home office and the branch for the year 2013. 4. Prepare individual financial statements of the home office and the branch. 5. Prepare combined financial statements of Homer Corporation for the year 2013. 1:28 PM PROBLEM 1-17 (Home Office and Branch Accounting - Comprehensive Problem) Homer Corporation of Baguio City has operated a sales branch in Dagupan City, for a number of years. All merchandise shipped to Dagupan City is transferred at cost. Dagupan City Branch also purchases merchandise from outside suppliers. This merchandise is sold by Dagupan City Branch at a 25% mark-up based on invoice cost. Statements of financial position for Homer Corporation home office and its Dagupan City Branch on December 31, 2012 are as follows: 1:27 PM/ Assets Cash Accounts Receivable, net Merchandise Inventory Property, Plant and Equipment, net Investment in Dagupan City Branch Total Assets Liabilities and Equity Accounts Payable Other Liabilities Home Office Current Ordinary Share Accumulated Profits Home Office Branch P 25,000 P 11,000 42,000 23,000 20,000 16,000 70.000 43,000 P 200,000 P 50,000 P 14,000 P 5.000 10,000 2.000 43,000 150,000 26.000 P 200,000 P 50.000 Total Liabilities and Equity All property, plant and equipment records for Homer Corporation and Dagupan City Branch are maintained in the home office books. Half of the P16,000 branch inventory on December 31, 2012 was received from local suppliers, and the remaining half was received from the home office at cost. A summary of the transactions of Homer Company's home office and Dagupan City branch for 2013 follows: a. Homer Company's sales for 2013 were P281,750, of which P200,000 were from home office sales and P81,750 were sales made by the Dagupan City branch. All sales were on account. b. Home office and branch purchases on account for 2013 were P205,000 and P20.000, respectively. The home office shipped P40,000 of merchandise to Dagupan City branch. c. The home office collected P195,000 on account during 2013. and Dagupan City branch collected P79,750. d. Dagupan City branch transferred P55,000 cash to the home office during 2013. e. Payments on account were: home office, P210,000 and Dagupan City branch, P21,000. f. During 2013, the home office paid operating expenses of P20,000, and Dagupan City branch paid operating expenses of P2,000. Of the operating expenses paid by the home office, P1,000 was allocated to Dagupan City branch. g. Total depreciation for the year was P8,000, of which P1,500 was allocated to branch operations. 1:27 PM/ Year-end inventories are P25,000 for the home office, and P10,000 for Dagupan City branch, with half of the branch inventory consisting of merchandise acquired from the home office. REQUIREMENTS: 1. Prepare journal entries for the year 2013 in the books of the home office and the branch. 2. Prepare the adjusting and closing entries in the home office books and the closing entry in the books of the branch. 3. Prepare unadjusted trial balance of the home office and the branch for the year 2013. 4. Prepare individual financial statements of the home office and the branch. 5. Prepare combined financial statements of Homer Corporation for the year 2013. 1:28 PM