Problem 9-2 The trial balances before the adjustment for the home office and the branch of the Spade Company show the following items on December 31. Differences in the shipments account balances result from the home office policy of billing the branch for merchandise at 20% above cost. Allowance for overvaluation of branch merchandise Shipments to branch Purchases (outsiders) Shipments from home office Merchandise inventory, December 1 Home office books P36,000 P80,000 Branch books P 25,000 P 96,000 P150,000 Required: a. What part of the branch inventory as of December 1 represented purchases from outsiders and what part represented goods acquired from the home office?

Problem 9-2 The trial balances before the adjustment for the home office and the branch of the Spade Company show the following items on December 31. Differences in the shipments account balances result from the home office policy of billing the branch for merchandise at 20% above cost. Allowance for overvaluation of branch merchandise Shipments to branch Purchases (outsiders) Shipments from home office Merchandise inventory, December 1 Home office books P36,000 P80,000 Branch books P 25,000 P 96,000 P150,000 Required: a. What part of the branch inventory as of December 1 represented purchases from outsiders and what part represented goods acquired from the home office?

Name: Problem 9-2The trial balances before the adjustment for the home offi
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Description: Problem 9-2The trial balances before the adjustment for the home office and the branch of the SpadeCompany show the following items on December 31. Differences in the shipments accountbalances result from the home office policy of billing the branch

Accounting

27th Edition

ISBN:9781337272094

Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Chapter7: Inventories

Section: Chapter Questions

Problem 7.7CP: Comparing inventory ratios for three companies The general merchandise retail industry has a number...

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Sales and notes receivable transactions The following were selected from among the transactions completed by Caldemeyer Co. during the current year. Caldemeyer Co. sells and installs home and business security systems. Jan. 3. Loaned 18,000 cash to Trina Gelhaus, receiving a 90-day, 8% note. Feb. 10. Sold merchandise on account to Bradford Co., 24,000. The cost of the merchandise sold was 14,400. 13. Sold merchandise on account to Dry Creek Co., 60,000. The cost of merchandise sold was 54,000. Mar. 12. Accepted a 60-day, 7% note for 24,000 from Bradford Co. on account. 14. Accepted a 60-day, 9% note for 60,000 from Dry Creek Co. on account. Apr. 3. Received the interest due from Trina Gelhaus and a new 120-day, 9% note as a renewal of the loan of January 3. (Record both the debit and the credit to the notes receivable account.) May 11. Received from Bradford Co. the amount due on the note of March 12. 13. Dry Creek Co. dishonored its note dated March 14. July 12. Received from Dry Creek Co. the amount owed on the dishonored note, plus interest for 60 days at 12% computed on the maturity value of the note. Aug. 1. Received from Trina Gelhaus the amount due on her note of April 3. Oct. 5. Sold merchandise on account to Halloran Co., 13,500. The cost of the merchandise sold was 8,100. 15. Received from Halloran Co. the amount of the invoice of October 5. Instructions Journalize the entries to record the transactions.
Comparing inventory ratios for three companies The general merchandise retail industry has a number of segments represented by the following companies: Company Name Merchandise Concept Costco Wholesale Corporation Membership warehouse Wal-Mart Discount general merchandise JCPenney Company Department store For a recent year, the following cost of merchandise sold and beginning and ending inventories have been provided from corporate annual reports (in millions) for these three companies: Costco Wal-Mart JCPenny Cost of merchandise sold 101,065 365,086 8,074 Merchandise inventory, beginning 8,908 45,141 2,721 Merchandise inventory, ending 8,456 44,858 2,652 a. Determine the inventory turnover ratio for all three companies. Round to two decimal places. b. Determine the days sales in inventory for all three companies. Use 365 days and round to one decimal place. c. Interpret these results based on each companys merchandise concept
AZKABAN bills its branch for merchandise shipments 25% of sale. As of cut-offf date, December 31, 2021, the following data were available. Outside supplier Shipment form home office Beginning Inventory 120,000 300,000 Purchases 360,000 471,000 Ending Inventory 150,000 420,000 The branch returned $15,000 merchandise to the home office acquired at billed price. How much is the amount of allowance for overvaluation account that was realized in December?
M7-20 to 22 (Supplement 7A) Calculating Cost of Goods Sold and Ending Inventory under Perpetual FIFO, LIFO, and Weighted Average Cost [LO 7-S1] In its first month of operations, Literacy for the Illiterate opened a new bookstore and bought merchandise in the following order: (1) 300 units at $5 on January 1, (2) 450 units at $6 on January 8, and (3) 840 units at $7 on January 29. Assuming 990 units are on hand at the end of the month. M7-21 (Supplement 7A) Calculating Cost of Goods Sold and Ending Inventory under Perpetual LIFO [LO 7-S1] Calculate the cost of goods available for sale, cost of goods sold, and ending inventory under the LIFO. Assume perpetual inventory system and sold 600 units between January 9 and January 28. (Round your intermediate calculations to 2 decimal places.)
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7. The Allowance for Overvaluation account of the home office is debited:* a. When the home office ships merchandise to the branch at a billed price that exceeds cost. b. In a journal entry to close the account at the end of an accounting period. c. When the branch’s ending inventory is recorded in the home office accounting records. d. In some other circumstances. 8. Statement 1 (S1): Freight charges incurred by the branch office on merchandise inventory shipped from the home office would be included in the branch’s cost of goods available for sale even if the wrong merchandise was shipped from the home office.Statement 2 (S2): One reason why a branch office would not have a “loading” account is that the home office usually does not want the branch personnel to know the amount of unrealized profit built in to the merchandise’s transfer price. * a. S1- True; S2- True b. S1- True; S2- False c. S1- False; S2- True d. S1- False; S2- False