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In: Accounting

On April 2019, Manama Company opened its first branch. Separate accounting records were established for the...

On April 2019, Manama Company opened its first branch. Separate accounting records were established for the branch. Both the home office and the branch used the perpetual inventory system. Among the intercompany transactions were the following: 1. The company transfer $10,000 cash to the branch. 2. Home office shipped merchandise costing $130,300 to branch at a billed price of $162,500. 3. Credit sales by the branch amounted to 80,000, and the cost of goods sold was $56,750. 4. Branch acquired truck for $4,000 cash and a note payable of $11,000; both the truck and the note payable will be carried in the accounting records of the home office. 5. The branch paid operating expenses of $30,000. 6. Operating expenses incurred by the home office and charged to the Branch totaled $4,400. Instructions: Prepare the journal entries on the Company records and on the branch records?

Solutions

Expert Solution

Home Office Branch
S.No. Account Titles Debit Credit S.No. Account Titles Debit Credit
1 Branch        10,000 1 Cash        10,000
Cash        10,000 Home Office        10,000
2 Branch    162,500 2 Merchandise    162,500
Merchandise    162,500 Home Office    162,500
3 Purchase        80,000 3 Home Office        80,000
Branch        80,000 Credit Sales        80,000
4 Branch          4,000 Cost of Goods Sold        56,750
Cash          4,000 Inventory        56,750
5 Operating Expenses        30,000 4 Truck        15,000
Branch        30,000 Home Office          4,000
Note Payable        11,000
6 Branch          4,400
Operating Expenses          4,400 5 Home Office        30,000
Cash        30,000
6 Operating Expenses          4,400
Home Office          4,400

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