Statsen Company, which prepares financial reports at the end of the calendar year, established a branch on July 1, 2020. The following transactions occurred during the formation of the branch and its first six months of operations, ending December 31, 2020.

1. The Home Office sent $35,000 cash to the branch to begin operations.

2. The Home Office shipped inventory to the branch. Intercompany billings totaled $75,000, which was the Home Office's cost.

3. The branch acquired merchandise display equipment which cost $15,000 on July 1, 2020. (Assume that branch fixed assets are carried on the home office books).

4. The branch purchased inventory costing $53,750 from outside vendors on account.

5. The branch had credit sales of $106,250 and cash sales of $43,750.

Requirements:

1. Prepare journal entries in the books of the home office and in the books of the branch office for the above transactions.,

Answer rating: 100% (QA)

The detailed answer for the above question is provided below Step 12 If a company wants to expand its business it may create a branch The company can establish its branch office in the same country or ... View the full answer