S1: The “Shipment to Branch” account is added to the home office’s purchase account in determining home office cost of goods sold. S2: When performing the end-of-the-period reconciliation between the Home Office account on the branch’s books and the Branch Account on the home office’s books, shipments in transit from the branch back to the home office will be treated as an addition to the home office’s Branch Account. Both statements are Only S2 is Only S1 is Both statements are 2. S1: Unrealized profits from transactions between a home office and its branch are added from Beginning inventory and deducted from ending inventory of the branch in preparing combined financial statements for the enterprise. S2: The balance of the Allowance for Overvaluation of Inventories: Branch ledger account is added from the balance of the Investment in Branch account in the separate balance sheet of the home office. Both statements are Only S2 is Both statements are Only S1 is 3. What is the most likely explanation if at the end a calendar period the balance of the Investment in Branch ledger account in the accounting records of the home office is forty thousand an the balance of the Home Office Account in accounting in the accounting records of the branch (after the branch recorded closing entries) is forty thousand five hundred. Net loss of the branch not recorded by the home Remittance of cash to the branch not recorded by the home Collectionby the home office of a branch note receivable not recorded by the branch Net Income of the branch not recorded by the home

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter5: Inventories And Cost Of Goods Sold

Section: Chapter Questions

Problem 5.1KTQ: Merchandise Accounting Merchandise Inventory Raw materials Work in process Finished goods Gross...

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S1: The “Shipment to Branch” account is added to the home office’s purchase account in determining home office cost of goods sold. S2: When performing the end-of-the-period reconciliation between the Home Office account on the branch’s books and the Branch Account on the home office’s books, shipments in transit from the branch back to the home office will be treated as an addition to the home office’s Branch Account.

Both statements are
Only S2 is
Only S1 is
Both statements are

2. S1: Unrealized profits from transactions between a home office and its branch are added from Beginning inventory and deducted from ending inventory of the branch in preparing combined financial statements for the enterprise. S2: The balance of the Allowance for Overvaluation of Inventories: Branch ledger account is added from the balance of the Investment in Branch account in the separate balance sheet of the home office.

Both statements are
Only S2 is
Both statements are
Only S1 is

3. What is the most likely explanation if at the end a calendar period the balance of the Investment in Branch ledger account in the accounting records of the home office is forty thousand an the balance of the Home Office Account in accounting in the accounting records of the branch (after the branch recorded closing entries) is forty thousand five hundred.

Net loss of the branch not recorded by the home
Remittance of cash to the branch not recorded by the home
Collectionby the home office of a branch note receivable not recorded by the branch
Net Income of the branch not recorded by the home

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