Reference no: EM132671618
JOURNAL ENTRY PROBLEM -
The AAA Corporation located in Quezon City, opened a branch on January 1, 2016 in Iloilo City. The transactions of the branch are summarized as follows:
1) Received cash of P30,000 from the home office.
2) Received merchandise in the amount of P75,000 from the home office. (This merchandise was shipped at the home office's office)
3) Purchased merchandise on account from a local vendor in the amount of P10,000.
4) Sales on account amounted to P125,000.
5) Returned merchandise in the amount of P2,000 to the home office.
6) Collected P105,000 from sales on account.
7) Paid P7,000 on account for purchases in (3) above.
8) Incurred the following expenditures during the year (all paid in cash):
a. Salaries - P10,000
b. Rent - 5,000
c. Utilities -2,000
d. Other Operating Expenses - 12,500
9) Received a journal voucher from the home office for the following charges:
a. Depreciation expense - P1,500
b. Rent - 5,000
c. Insurance - 1,000
10) Remitted P65,000 to the home office for merchandise shipments.
11) A customer paid P3,000 directly to the home office. The home office is keeping the funds.
12) Closed the income summary accounts. The closing inventory amounted to P5,000.
REQUIRED - Prepare the necessary journal entries on the books of the branch and the home office.