Professional Documents
Culture Documents
Fast-Stop three all-night grocery stores located in western Virginia. Each store has a branch manager with authority to accept inventory items
at home office or to purchase from outside wholesalers, at his or her discretion.
Pre-closing summary information for Fast-stop and its branches at December 31, 2015 includes the following accounts and amounts.
Home
Office
Debits
Cash
Other current assets
Inventories
Plant assets
Dublin branch current
Radford branch current
Blacksburg branch current
Cost of sales
Expenses
Total debits
Credits
Liabilities
Ordinary share
Retained earnings
Home office
Unrealized profit in Dublin
Unrealized profit in Radford
Unrealized profit in Blacksburg
Sales
Total credits
Dublin
Branch
Radford
Branch
Blacksburg
Branch
20,000.00
5,500.00
14,000.00
150,000.00
28,534.00
15,393.50
11,409.00
17,000.00
62,500.00
324,336.50
6,000.00
4,400.00
7,400.00
20,000.00
4,800.00
3,520.00
5,450.00
16,000.00
3,840.00
2,816.00
4,650.00
12,800.00
24,137.00
35,000.00
96,937.00
20,690.50
40,000.00
90,460.50
15,643.00
30,000.00
69,749.00
12,500.00
100,000.00
81,310.00
10,000.00
8,000.00
6,400.00
19,368.00
11,887.50
4,409.00
67,569.00
96,937.00
70,573.00
90,460.50
58,940.00
69,749.00
3,204.00
1,273.50
1,049.00
125,000.00
324,336.50
1.) Cost of merchandise shipped from home office to Dublin and Radford amounted to $100 and $400, respectively. Freight-in of $10 for
every $100 billed price of merchandise shipments is paid by the home office. These shipments were still in transit and no communication
has yet been made.
2.) Cash remittance of $5,000 and $2,500 by Blacksburg and Dublin, respectively, were still not recorded by the home office as of end of the
month.
3.) Merchandise are shipped at the following mark up on cost:
20%
Dublin
Radford
15%
Blacksburg
10%
4.) At end of the month, the following inter branch cash transfer transactions were only recorded by the transferring party.
From
To
Amount
Radford
Blacksburg
3,000.00
Dublin
Blacksburg
1,500.00
5.) Communication as to the following inter office transactions were not yet made by the paying party.
Total
Amount of expense charged to
Amount
Paid by
Home office
Dublin
Radford
Blacksburg
2,000.00 Blacksburg
1,000.00
500.00 ###
4,000.00 Dublin
1,750.00
250.00
1,500.00
500.00
6.) The branches have no stocks of merchandise at the beginning, except for Radford, amounting to 6,000, all coming from outside sources.
The home office has a beginning inventories of 15,000.
7.) The home office has not yet recorded a receipt of purchase of merchandise from a supplier costing 2,000, freight collect of 40. The
purchase has a term of n/30, FOB shipping point. This batch of merchandise were subsequently shipped to Dublin branch with a freight of
50 (paid by home office), in which both the home office and Dublin branch properly recorded. Subsequently, Dublin shipped equally, half
of these merchandise to Blacksburg and Radford with a freight paid by Dublin for 20 and 15, respectively. Shipments of this type would
have a freight cost of 30 and 20 to Blacksburg and Radford, respectively, if directly shipped from home office.This interbranch transfer of
merchandise was only recorded by Dublin branch and was still in transit.
8.) Details of merchandise ending, purchases, and freight in, before the above adjustments, are as follows:
Ending inventory
Outside
Home office
Freight in
Purchases
1,000.00
Home office
14,000.00
50,000.00
1,157.00
Dublin
5,000.00
2,400.00
12,500.00
837.00
Radford
2,000.00
3,450.00
10,000.00
754.00
Blacksburg
3,000.00
1,650.00
8,000.00
Required:
1.) Prepare a schedule reconciling the home office and branches' reciprocal accounts.
2.) Prepare the necessary adjusting entries in each books.
3.) Compute for the net income of the home office and each of the three branches in their separate books.
4.) Prepare a worksheet consolidating all balances, with proper eliminating entries under perpetual inventory system.
PERPETUAL
Debit
Credit
Inventories
Inventories
Home office
2 Cash
2 points/.5
Dublin branch current
Blacksburg branch current
7,500.00
4,500.00
2,500.00
5,000.00
2 points/.5
1,500.00
3,000.00
1,000.00 2 points/.5
500.00
Home office
500.00
2,000.00
1,750.00
1,500.00 2 points/.5
500.00
3,750.00
5 Inventories
Inventories
Liabilities
Cash
2 points/.5
2,000.00
40.00
2,000.00
40.00
2,448.00
2,040.00
408.00
50.00
50.00
606.50
591.00
204.00
10.00
1 point
1 point
1 point
Inventories
Inventories
Inventories
1
1
1
1
point
point
point
point
76.50
51.00
1,284.00
1,020.00
510.00
510.00
1
Cash
Other current assets
Inventories
Plant assets
Dublin branch current
Radford branch current
Blacksburg branch current
Cost of sales
Expenses
Excess freight
Liabilities
Ordinary share
Retained earnings
Home office
Unrealized profit in Dublin
Unrealized profit in Radford
Unrealized profit in Blacksburg
Sales
2
Cash
Other current assets
Inventories
Blacksburg
12.50
20.00
32.50
30.00
2.50
Radford
###
15.00
27.50
20.00
7.50
2,000.00
76.50
51.00
22,221.50
DUBLIN BOOKS
Unadjusted
Debit
6,000.00
4,400.00
7,400.00
132.00
Credit
-
Credit
40.00
1,020.00
9,034.00
3,000.00
7,000.00
Plant assets
Dublin branch current
Radford branch current
Blacksburg branch current
Cost of sales
Expenses
Excess freight
Liabilities
Ordinary share
Retained earnings
Home office
Unrealized profit in Dublin
Unrealized profit in Radford
Unrealized profit in Blacksburg
Sales
3
Cash
Other current assets
Inventories
Plant assets
Dublin branch current
Radford branch current
Blacksburg branch current
Cost of sales
Expenses
Excess freight
Liabilities
Ordinary share
Retained earnings
Home office
Unrealized profit in Dublin
Unrealized profit in Radford
Unrealized profit in Blacksburg
Sales
4
Cash
Other current assets
Inventories
Plant assets
Dublin branch current
Radford branch current
Blacksburg branch current
Cost of sales
Expenses
20,000.00
24,137.00
35,000.00
(10,000.00)
(19,368.00)
(67,569.00)
-
132.00
RADFORD BOOKS
Unadjusted
Debit
4,800.00
3,520.00
5,450.00
1,112.50
16,000.00
20,690.50
40,000.00
(8,000.00)
(11,887.50)
(70,573.00)
1,112.50
BLACKSBURG BOOKS
Unadjusted
Debit
3,840.00
4,500.00
2,816.00
4,650.00
591.00
12,800.00
15,643.00
30,000.00
-
632.00
632.00
Credit
3,112.50
3,112.50
Credit
-
Excess freight
Liabilities
Ordinary share
Retained earnings
Home office
Unrealized profit in Dublin
Unrealized profit in Radford
Unrealized profit in Blacksburg
Sales
(6,400.00)
(4,409.00)
(58,940.00)
-
Cash
Other current assets
Inventories, ending
Plant assets
Dublin branch current
Radford branch current
Blacksburg branch current
Inventories, beginning
Purchases
Shipments from home office
Freight-in
Shipments to Dublin branch
Shipments to Radford branch
Shipments to Blacksburg branch
Cost of sales
Expenses
Excess freight
Liabilities
Ordinary share
Retained earnings
Home office
Unrealized profit in Dublin
Unrealized profit in Radford
Unrealized profit in Blacksburg
Sales
Net income per books
Realized profits
Actual net income
Home
Office
27,460.00
5,500.00
16,040.00
150,000.00
20,000.00
15,000.00
10,000.00
17,000.00
62,500.00
10.00
(14,500.00)
(100,000.00)
(81,310.00)
(3,000.00)
(1,350.00)
(1,100.00)
(125,000.00)
(2,750.00)
(45,490.00)
(45,490.00)
2 points
5,091.00
5,591.00
5,591.00
15,000.00
3,000.00
18,000.00
18,000.00
9,000.00
1,350.00
10,350.00
10,350.00
Difference
16,040.00
7,532.00
6,562.50
14,000.00
5,000.00
2,000.00
2,400.00
120.00
12.00
7,532.00
-
3,450.00
1,046.50
66.00
6,562.50
-
3,000.00
1,350.00
2,040.00
16,040.00
400.00
20.00
420.00
2,580.00
-
2,580.00
763.50 2 points /.5
899.00
4,242.50
45,000.00
2 points /.5
450.00
136.50
586.50
763.50
(0.00)
Home office
Dublin branch current
Radford branch current
Blacksburg branch current
Shipments
Shipments
Shipments
Unrealized
Unrealized
Unrealized
Shipments
to Dublin branch
to Radford branch
to Blacksburg branc
profit in Dublin
profit in Radford
profit in Blacksburg
from home office
Home office
20,000.00 Dublin branch current
15,000.00 Radford branch current
10,000.00 Blacksburg branch current
DUBLIN BOOKS
RADFOR
Debit
2 points/.5
1 point
120
12
Credit
Inventories
Inventories
132 Home office
500.00
500.00 Home office
Expenses
Home office
Cash
250.00
3,750.00
Home office
4,000.00
Inventories
Inventories
Home office
Inventory
Home office
2,448.00
Inventory
Home office
50.00
Home office
Inventory
1,249.00
1,249.00
1,020.00
204.00
25.00
35.00
35.00
R
Home to dublin
Dublin to branch
Total actual
Direct shipment
Excess freight
Adjusted
27,460.00
5,500.00
16,040.00
150,000.00
20,000.00
15,000.00
10,000.00
17,000.00
62,500.00
10.00
(14,500.00)
(100,000.00)
(81,310.00)
(3,000.00)
(1,350.00)
(1,100.00)
(125,000.00)
(2,750.00)
Adjusted
6,000.00
4,400.00
7,532.00
B
12.50
15.00
27.50
20.00
7.50
12.50
20.00
32.50
30.00
2.50
20,000.00
24,137.00
35,000.00
(10,000.00)
(20,000.00)
(67,569.00)
(500.00)
Adjusted
4,800.00
3,520.00
6,562.50
16,000.00
20,690.50
40,000.00
(8,000.00)
(15,000.00)
(70,573.00)
(2,000.00)
Adjusted
8,340.00
2,816.00
5,241.00
12,800.00
15,643.00
30,000.00
(6,400.00)
(10,000.00)
(58,940.00)
(500.00)
G TRIAL BALANCE
Blacksburg
Branch
8,340.00
2,816.00
5,241.00
12,800.00
15,643.00
30,000.00
(6,400.00)
(10,000.00)
(58,940.00)
(500.00)
(13,297.00)
(899.00)
(14,196.00)
2 points
11,000.00
1,100.00
12,100.00
12,100.00
TOTAL
46,600.00
16,236.00
35,375.50
198,800.00
20,000.00
15,000.00
10,000.00
77,470.50
167,500.00
10.00
(38,900.00)
(100,000.00)
(81,310.00)
(45,000.00)
(3,000.00)
(1,350.00)
(1,100.00)
(322,082.00)
(5,750.00)
(77,101.50)
(4,242.50)
(81,344.00)
Elimination
Debit
45,000.00
3,000.00
1,350.00
1,100.00
50,450.00
entries
Credit
1,207.50
20,000.00
15,000.00
10,000.00
4,242.50
50,450.00
Total
46,600.00
16,236.00
34,168.00
198,800.00
73,228.00
167,500.00
10.00
(38,900.00)
(100,000.00)
(81,310.00)
(322,082.00)
(5,750.00)
5,241.00
35,375.50
3,000.00
24,000.00
1,650.00
561.00
30.00
5,241.00
-
7,500.00
3,767.50
108.00
35,375.50
1,100.00
5,450.00
150.00
51.00
201.00
899.00
0.00
1,000.00
207.50
1,207.50
4,242.50
Checking
Ending inventories @ billed price
Unrealized profit, ending
Ending inventories, @ cost
ments
ments
ments
lized
lized
lized
ments
to Dublin branch
to Radford branch
to Blacksburg branch
profit in Dublin
profit in Radford
profit in Blacksburg
from home office
n branch current
rd branch current
sburg branch current
3,000.00
1,350.00
1,100.00
45,000.00
20,000.00
15,000.00
10,000.00
RADFORD BOOKS
BLACKSBURG BOOKS
Debit
2 points/.5
Credit
460.00
46.00
506
Cash
Home office
1 point
500.00
500.00
1 point
1,500.00
1,500.00 Home office
2 points/.5
586.50
20.00
-
Inventories
- Inventories
606.50 Home office
2,040.00
510.00
B
510.00
76.50
586.50
510.00
51.00
561.00
Income
Statement
Balance
Sheet
46,600.00
16,236.00
34,168.00
198,800.00
-
73,228.00
167,500.00
10.00
(38,900.00)
(100,000.00)
(81,310.00)
(322,082.00)
(81,344.00)
(5,750.00)
75,594.00
billed price
35,375.50
(1,207.50)
34,168.00
BLACKSBURG BOOKS
Debit
Credit
4,500.00
1 point
1 point
4,500.00
500.00
500.00
2 points/.5
561.00
30.00
-
591.00