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2.ast - Hoba Part 1

The document summarizes cost of sales calculations for a home office and branch. It shows beginning and ending inventory, purchases, shipments between the home office and branch, and cost of sales for each. It also provides sales and cost of sales percentages for gross profit calculations. Several problems are presented showing sales, cost of sales, expenses and income calculations for the home office and branch. Adjusting entries are provided to reconcile the branch and home office accounts.

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126 views12 pages

2.ast - Hoba Part 1

The document summarizes cost of sales calculations for a home office and branch. It shows beginning and ending inventory, purchases, shipments between the home office and branch, and cost of sales for each. It also provides sales and cost of sales percentages for gross profit calculations. Several problems are presented showing sales, cost of sales, expenses and income calculations for the home office and branch. Adjusting entries are provided to reconcile the branch and home office accounts.

Uploaded by

ElaineJrV-Igot
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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COST OF SALES

Home Office Branch


Beginning Inventory Beginning Inventory
+ Purchases + Purchases
- Shipment to Branch + Shipment from HO
GAFS GAFS
- Ending Inventory - Ending Inventory
COS COS

HOME OFFICE
Branch 10,000.00
Shipment to 10,000.00

Cash/AR 10,000.00
Sales 10,000.00

COS 10,000.00
Inventory 10,000.00

Branch 12,000.00
Shipment to 10,000.00
Allowance 2,000.00

GP rate MU rate
Sales 100% 125%
COS 75% 100%
GP 25% 25%

*GP is based on sales *GP is based on cost

PROBLEM 1
a Samples - Agency 13,000.00
Shipment to Agency

Working Fund - Agency 10,000.00


Cash
Account Receivable 120,000.00
Sales - Sta. Mesa Agency

Cash 91,000.00
Accounts Receivable

Expenses 10,500.00
Cash

Expenses 6,850.00
Cash

Cost of Sales 93,000.00


Shipment to Agency/Inventory

Expenses/Impairment Loss 5,000.00


Samples - Agency

b Sales
COS
GP
Expenses - WF
Expenses paid by HO
Impairment Loss
Depreciation Expenses
Net Income

PROBLEM 2
Sales
COS
GP
Expenses - WF
Expenses paid by HO
Impairment Loss
Depreciation Expenses
Net Income

PROBLEM 3
a Home Office (13,600.00)
Branch 28,400.00

b Account
Branch HO
Unadjusted Balance 28,400.00 (13,600.00)
Shipment - (5,000.00)
Expense allocation - (900.00)
Note collected 100.00 -
Cash remittance (6,000.00) -
Merchandise returned (3,000.00) -
Adjusted Balance 19,500.00 (19,500.00)

PROBLEM 4
Home Office Branch
Debit Credit Debit
Cash 116,000.00 31,250.00
AR 104,250.00 63,000.00
Inventory 242,500.00 117,500.00
Branch 196,500.00 -
FF 100,000.00 40,000.00
AD 27,900.00
AP 112,750.00
Home Office -
Share Capital 250,000.00
RE 302,100.00
Sales 525,000.00
Shipment to 251,000.00
Purchases - -
Shipment from - 251,000.00
Operating Expense 133,000.00 80,000.00
Depreciation Expense 5,900.00 3,250.00
TOTAL 898,150.00 1,468,750.00 586,000.00
Income Summary 570,600.00
TOTAL 1,468,750.00 1,468,750.00 586,000.00

ADJUSTMENTS:
Inventory, end 242,500.00
Income Summary 570,600.00
Inventory, beg 200,600.00
Purchases 612,500.00

Depreciation Exp 5,900.00


AD 5,900.00
ELIMINATION ENTRIES
Home Office 196,500.00
Branch 196,500.00

Shipment to 251,000.00
Shipment from 251,000.00

Allowance -
Inventory -

Sales -
COS -

Accounts Payable -
Accounts Receivable -

PROBLEM 5

Beginning Inventory outsider


ho allowance
Purchases outsider
Shipment from HO ho
Ending Inventory outsider
ho

a Inventory Beginning At Cost


HO 80,000.00 80,000.00
Branch outsider 7,500.00 7,500.00
ho 24,500.00 18,375.00
105,875.00

Ending Inventory At Cost


HO 55,000.00 55,000.00
Branch outsider 5,500.00 5,500.00
ho 26,000.00 19,500.00
80,000.00

b At Mark Up At Cost
Beginning Inventory outsider 7,500.00 7,500.00
ho 24,500.00 18,375.00
Purchases 20,000.00 20,000.00
Shipment from HO 40,000.00 30,000.00
GAFS 92,000.00 75,875.00
Ending Inventory outsider 5,500.00 5,500.00
ho 26,000.00 19,500.00
COS 60,500.00 50,875.00

c Sales 78,500.00
COS - at cost 50,875.00
GP 27,625.00
Expenses 12,500.00
True Income 15,125.00

Sales 78,500.00
COS - at MU 60,500.00
GP 18,000.00
Expenses 12,500.00
Net Income reported 5,500.00
Realized MU 9,625.00
True Income 15,125.00
ning Inventory

ment from HO

g Inventory

BRANCH
Shipment from 10,000.00
HO 10,000.00

Purchases 10,000.00
Cash/AP 10,000.00

Shipment from 12,000.00


HO 12,000.00

s based on cost

13,000.00

10,000.00
120,000.00

91,000.00

10,500.00

6,850.00

93,000.00

5,000.00

120,000.00
93,000.00
27,000.00
6,850.00
10,500.00
5,000.00
-
4,650.00

64,380.00
51,504.00
12,876.00
3,815.00
- 25,000.00
5,675.00 6,000.00 annually
250.00 500.00 monthly
3,136.00 250.00

ADJUSTMENTS:
Shipment from HO 5,000.00
Home Office 5,000.00
Expense 900.00
HO 900.00

Branch 100.00
Interest Income 100.00

Cash 6,000.00
Branch 6,000.00

Shipment to Branch 3,000.00


Branch 3,000.00

Branch Combined Elimination Entries Consolidated


Credit Debit Credit Debit Credit Debit
147,250.00 - 147,250.00
167,250.00 - 167,250.00
360,000.00 - 360,000.00
196,500.00 - 196,500.00 -
140,000.00 - 140,000.00
3,250.00 - 31,150.00 -
51,250.00 - 164,000.00 -
196,500.00 - 196,500.00 196,500.00 -
- - 250,000.00 -
- - 302,100.00 -
330,000.00 - 855,000.00 -
- - 251,000.00 251,000.00 -
- - -
251,000.00 - 251,000.00 -
213,000.00 - 213,000.00
9,150.00 - 9,150.00
581,000.00 1,484,150.00 2,049,750.00 447,500.00 447,500.00 1,036,650.00
5,000.00 565,600.00 565,600.00
586,000.00 2,049,750.00 2,049,750.00 447,500.00 447,500.00 1,602,250.00

117,500.00 INCOME STATEMENT:


5,000.00 Sales
- Cost of Sales
112,500.00 Beginning Inventory 200,600.00
Purchases 725,000.00
3,250.00 Ending Inventory (360,000.00)
3,250.00 Gross Profit
Operating Expense
Depreciation Expense
Net Income

BALANCE SHEET:
Cash 147,250.00
AR 167,250.00
Inventory 360,000.00
Branch -
FF 140,000.00
AD -
AP -
Home Office -
Share Capital -
RE -
TOTAL 814,500.00

Sales 40,000.00 shipment from


COS 30,000.00 shipment to
6,125.00 GP 10,000.00

GP rate 0.25
MU rate 0.33

6,500.00

Allowance
-
6,125.00 6,125.00
- 10,000.00
10,000.00 16,125.00 allowance charged by HO unadjusted balance
16,125.00 6,500.00 adjusted balance
- 9,625.00 realized MU
6,500.00
9,625.00

WAYS TO COMPUTE TRUE INCOME:


1. Convert everything at cost
2. NI reported by the branch + Realized MU

HO Branch Customer

12,000.00 15,000.00 15,000.00


10,000.00 12,000.00 10,000.00
allowance 2,000.00 3,000.00 5,000.00

realized
Consolidated
Credit
-
-
-
-
-
31,150.00
164,000.00
-
250,000.00
302,100.00
855,000.00
-
-
-
-
-
1,602,250.00

1,602,250.00

855,000.00

565,600.00
289,400.00
213,000.00
9,150.00
67,250.00 Income Summary 67,250.00
RE 67,250.00

-
-
-
-
-
31,150.00
164,000.00
-
250,000.00
369,350.00
814,500.00

usted balance
ted balance

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