Reference no: EM132651849

Rustans Trading Co. operates a branch in Cebu City. On December 31, 2018, the Home Office Current account in the branch books showed a credit balance of P261,456. The interoffice accounts were in agreement at the beginning of the year.

For the purpose of reconciling the interoffice accounts, the following facts were determined:

1. Cebu City branch paid P16,250 representing registration and seminar fee of the senior vice president for finance of the company, when the vice president attended a convention. Of the amount paid, 40% was charged to Rustans Trading, 20% to Cebu, and the remaining amount to Rustans' other branch located in Davao City. Cebu branch recorded a receivable from the home office at the said amount and credited cash. Rustans Trading was not yet notified to the said event.
2. Total general expense were P43,275. Rustans Trading allocated 2/5 of the expenses to Cebu City branch. The branch erroneously debited 2/5 of the allocated amount to its reciprocal account twice.
3. Rustans Trading transferred inventory costing P22,500 to Cebu branch and the branch paid the corresponding freight of P1,250. Cebu branch was instructed by Rustans to transfer 3/4 of the said inventories to Davao branch and to shoulder the freight costing P1,750. Cebu branch made the transfer to its books but it recorded the transfer at 1/4 of the original inventories and credited the payment for the freight at P175 by mistake.
4. Cebu City branch recorded a machinery costing P10,616 which it purchase for its own use on Dcember 31, 2018. The machinery will be recorded in the books of the home office. Rustans Trading recorded the memo received from the branch by debiting its reciprocal account and crediting liability account to Cebu branch in the amount P10,661.

Required:

Question 1: What is the unadjusted balance of the Investment in Cebu Branch account on December 31,2018?