Reference no: EM132538965

The pre-closing general ledger trial balances at December 31, 2019, for Baltimore Company and its Atlanta branch are shown below:

Baltimore Company

General Ledger Trial Balances

December 31, 2019

Home Office Branch

                                                                    Dr. Cr.                                                                              Dr. Cr.

Cash..............................................$36,000......................................................................$8,000

Accounts receivable.............................................35,000.................................................12,000

Inventory Home .......................................................70,000

Inventory Branch........................................................15,000

Fixed Assets (net)..................................................90,000

Investment in Branch............................................20,000

Accounts payable...................................36,000...................................................................13,500

Accrued expenses payable.........................................14,000....................................................2,500

Home office equity.....................................................9,000

Capital stock......................................................50,000

Retained Earnings...................................................45,000

Home office

Sales....................................................................440,000

Purchases............................................................290,000

Expenses..............................................................44,000

Branch

Sales..................................................................95,000

Purchases................................................................24,000

Purchases from home office.....................................................45,000

Expenses..................................................................16,000

Total..................................................................585,000...........................................................120,000

Your audit disclosed the following:

Point 1. On December 23, the branch manager purchased $4,000 of furniture and fixtures but failed to notify the home office. The bookkeeper, knowing that all fixed assets are carried on the home office books, recorded the proper entry on the branch records. It is the company's policy to take any depreciation on assets acquired in the last half of a year.

Point 2. On December 27, a branch customer erroneously paid his account of $2,000 to the home office. The bookkeeper made the correct entry on the home office books but did not notify the branch.

Point 3. On December 30, the branch remitted cash of $5,000 which was received by the home office in January 2020.

Point 4. On December 31, the branch erroneously recorded the December allocated expenses from the home as $500 instead of $1,500.

Point 5. On December 31, the home office shipped merchandise billed at $3,000 to the branch, which was received in January 2020.

The entire beginning inventory of the branch had been purchased from home office. Home office 2019 shipments to the branch were purchased by the home office in 2019. The physical inventories at December 31,2019 excluding the shipment in transit, are home office,$55,000(at cost); and branch ;$20,000 (composed of $18,00 from home office and $2,000 from outside vendors).

Required (Disregard income tax)

Question 1: Make a worksheet showing Adjustments and Eliminations, Home office income statement, Branch income statement, and Combined Balance sheet.