Reference no: EM132951147
Questions -
Q1. On August 1, 2020, CHEAP CO, a home office established two branches: STAKE branch and THRIFT branch. CHEAP, transferred P280,000 worth of cash and P1,225,000 worth of merchandise to its STAKE branch. On August 15, the head office instructed ORANGE to transfer three-fourths of the merchandise and cash received to THRIFT branch. In addition, on October 6, 2019, shipments from the main office received by STAKE branch amounting to P437,500 and freight, collect amounting to P22,750. Three-fifths of the said shipments were sold by STAKE branch to customers. On November 9, 2020, upon instruction of the home office, STAKE branch transferred to THRIFT half of the remaining immediate prior month shipments from CHEAP. The receiving branch paid additional freight in the amount of P8,750. Had the merchandise been shipped from CHEAP directly to THRIFT only P6,650 worth of freight would have been incurred.
What is the balance of the Investment in THRIFT branch account in the separate books of the home office?
Q2. On January 1, 2020, JAMES, a real estate company, entered into a contract to construct a building on a piece of land it has acquired and, when construction is complete, to deliver the entire property to a customer. The following information pertains to the said contract. Total cost of land - P2M; Estimated total cost of construction - P8M; Estimated total cost of contract - P10M; Agreed purchase price - P11M. In CY 2016, total construction cost incurred amount to P2M while fair value of the land is P2.5M. The contract is considered to be a multiple contract.
What is the amount included as current asset in the financial statements of JAMES related to the above information under zero profit method?
Q3. On December 31, 2020, the Investment in Branch account in the home office's books has a balance of P369,000. In analyzing the transactions involving the home office and the branch for December, the recipient of the transaction either was not yet notified or erroneously recoded the said transaction.
A. A P17,000 remittance initiated on December 27, 2020 was recorded twice in 2020.
B. A merchandise shipment of P21,000 on December 29, 2020 was recorded at P12,000 on the same year.
C. Advertising expense incurred amount to P9,000. 1/4 of the incurred amount was allocated on December 21, 2020. Upon notification, it was recorded in the amount of P22,500 on December 26, 2020.
D. Inventory costing P8,000 was returned on December 19, 2020.
The billing was at a cost, it was still in transit by the end of the year.
What is the amount of the Home Office Current account debited in the preparation of the combined statement of financial position as of December 31, 2020?
Q4. On January 1, 2020, Bretman entered into a consignment agreement with Rock. The consignment arrangement provided that Rock is entitled 5% commission based on sales. Bretman manufactured 100 boxes of product X at manufacturing cost of P200,000. On July 1, 2020, Bretman shipped through a common carrier 30 boxes of consigned goods to Rock. The common carries collected the freight amounting to P3,000 form Rock. For the year ended December 31, 2020, Rock sold for cash 20 boxes of consigned goods to final consumers at Bretman's predetermined price of P3,000 per box.
What is the net remittance to be made by Bretman to Rock as of December 31, 2020?
Q5. The We Will All Die Branch of Quick Company is billed for merchandise by the home office at 20% above cost. The branch in turn prices merchandise for sale purposes at 25% above billed price. On January 25 all of the branch merchandise is destroyed by fire. No insurance was maintained. Branch accounts show the following information: Inventory, Jan 1, 173,000; Sales Returns, 30,000; Shipments from Home Office (Jan 1-25),200,000; Sales Discounts,30,000; Sales 350,000.
What is the cost of the merchandise destroyed by fire?