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AFAR Home Office and Branch

The document provides trial balance information for the home office and branch of Katherine Company as of December 31, 2021. It shows the home office supplies merchandise to the branch at a billing rate of 120% of cost. The branch's beginning inventory of $15,000 consisted of $7,500 of goods from the home office and $2,500 from outside suppliers. The combined net income for both the home office and branch was $24,600.

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Czarina Panganiban
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303 views1 page

AFAR Home Office and Branch

The document provides trial balance information for the home office and branch of Katherine Company as of December 31, 2021. It shows the home office supplies merchandise to the branch at a billing rate of 120% of cost. The branch's beginning inventory of $15,000 consisted of $7,500 of goods from the home office and $2,500 from outside suppliers. The combined net income for both the home office and branch was $24,600.

Uploaded by

Czarina Panganiban
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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HOME OFFICE AND BRANCH

1. Selected information from the trial balances of the home office and the branch of Katherine
Company on December 31, 2021 is provided. The branch acquires merchandise from the home
office and outside suppliers.
Home Office Branch
Sales P60,000 P30,000
Shipments to branch 8,000
Allowance for overvaluation of branch inventory 3,600
Shipments from home office 10,000
Purchase (outsiders) 35,000 5,500
Merchandise inventory 12/01/2021 20,000 15,000
Expenses 14,000 6,000

Additional information:

Merchandise inventory, December 31, 2021:

Home office P20,000


Branch (P7,500 from home office and P2,500 from outsiders) 10,000

Question 1:
The billing rate of home office to branch for merchandise shipments is
a. 120% of cost
b. 125% of cost
c. 130% of cost
d. 135% of cost

Question 2:
How much of the December 1 inventory of the branch represent purchases from outsiders and
goods shipped from home office
a. Home office, P5,000 and Outsiders, P10,000
b. Home office, P15,000 and Outsiders, P00,000
c. Home office, P8,000 and Outsiders, P7,000
d. Home office, P12,000 and Outsiders, P3,000

Question 3:
The net income reported by the branch is
a. P4,500
b. P5,600
c. P3,500
d. P2,500

Question 4: The combined net income for Home office and branch operations is
a. P22,500
b. P24,600
c. P25,100
d. P21,500

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