On January 4, 20XX, Hope Company opened its first branch with instructions to its branch manager that the branch performsthe functions of granting credit, billing customers, accounting for receivables, and making cash collections. The branch paysits operating expenses by checks drawn on its bank account. The branch obtains its merchandise solely from the homeoffice; billing for the shipments are at cost to the home office.The adjusted trial balances of the home office and the branch on December 31, 20XX are as follows:CashNotes ReceivableAccounts Receivable (net)InventoriesFurniture and equipment (net)Branch currentAccounts payableShare Capital, P2 parHome Office currentRetained Earnings, December 31, 20XXSalesCosts of Goods SoldOperating ExpensesHope CompanyAdjusted Trial BalancesDecember 31, 20XXHome Office(Dr)63,00010,500120,600143,70072,150124,050300,750104,250939,000(Cr)61,500300,00037,500540,000939,000(Dr)Branch21,90055,95036,300128,70032,850275,700(Cr)124,050151,650275,700The physical inventories on December 31, 20XX are in agreement with the perpetual records of the home office and thebranch. The shipment to branch during the year amounts to P135,000.Required:1. Prepare the working paper for the combined financial statements of the home office and the branch.2. Prepare the closing journal entries on December 31, 20XX for the branch.3. Prepare the closing journal entries on December 31, 20XX pertaining to branch operations for the home office.

SOLUTION:- HOPE COMPANY WORKING PAPER FOR COMBINED STATEMENTS FOR THE YEAR ENDED DECEMBER…

Required: 1. Prepare the working paper for the combined financial statements of the home office and the branch. 2. Prepare the closing journal entries on December 31, 20XX for the branch. 3. Prepare the closing journal entries on December 31, 20XX pertaining to branch operations for the home office.

Required: 1. Prepare the working paper for the combined financial statements of the home office and the branch. 2. Prepare the closing journal entries on December 31, 20XX for the branch. 3. Prepare the closing journal entries on December 31, 20XX pertaining to branch operations for the home office.

Century 21 Accounting Multicolumn Journal

11th Edition

ISBN:9781337679503

Author:Gilbertson

Publisher:Gilbertson

Chapter5: Cash Control Systems

Section: Chapter Questions

Problem 2AP

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