Reference no: EM132778069

ABASE HUMILIATE Co. is currently preparing its combined financial statements for the year ended December 31, 20x1. As of this date, the "Investment in branch" account has a balance of ?380,000 while the "Home office" account has a balance of ?528,000.

The following information has been gathered:

(a) The home office allocated unpaid utilities expenses amounting to ?40,000 to the branch which the branch did not record in full. Instead, the branch sent a wrong adjusting memo to the home office reducing the charge by ?10,000 and setting up a liability for the remaining amount.

(b) The home office erroneously credited the branch for a return of shipment of merchandise worth ?100,000. The branch did not make any return of merchandise.

(c) The branch mistakenly received a copy of the home office correcting entry for item (b) above dated January 3, 20x2 and entered a credit in favor of the home office on December 31, 20x1.

(d) The branch mistakenly sent the home office a debit memo amounting to ?12,000 for an apparent remittance of collections which did not happen. The home office did not record the debit memo.

REQUIREMENT:

Problem 1: How much is the net adjustment to the "Home office" account? increase (decrease)