In: Accounting
San opening a branch in other city in the country, the following is unadjusted trial balance for san and its branch for the year ended 31/12/2019
Trail balance 31/12/2019:
San branch
Cash |
22000 |
10175 |
account /rec. |
12000 |
7550 |
Investment in Branch |
60000 |
|
Inventories1/1/2019 |
23000 |
11000 |
Allowance for valuation |
(1000) |
|
Prepaid rent |
8000 |
8450 |
Equipment |
177000 |
32450 |
Ordinary shares |
(200,000) |
|
Retained earning1/1/2019 |
(34,000) |
|
Dividend |
15000 |
|
Account payable |
(35000) |
(2725) |
Home office |
(51000) |
|
Purchases |
190,000 |
|
Shipment from home office |
104500 |
|
Shipment to branch |
(110,000) |
|
Sales |
(169000) |
(144700) |
Operating expenses |
42000 |
24300 |
total |
0000 |
0000 |
The following information are available for you not considered in the trial balance:
1- the branch sent 1700$ cash for the home office in 31/12/2019.
2- the home office replenished the branch petty cash in 31/12/2019 by 1800$ in transit.
3- the home office shipped the goods for the branch at markup %10.
4- goods in transit for branch at cost was $5000.
5- ending inventory in san company was $30,000 and 9,900 in branch
Required:
1-Prepare the entries required to reconcile the home office and investment accounts?
2- prepare adjusted trial balance for san and its branch?
3- prepare a working paper for combined financial statement for san company in 31/12/2019?
4- prepare closing entries in branch and san books?
Adjusted Trial Balance | ||
Particulars | San | Branch |
Cash | 22000 | 10275 |
account /rec. | 12000 | 7550 |
Investment in Branch | 60000 | |
Inventories1/1/2019 | 23000 | 11000 |
Allowance for valuation | -1000 | |
Prepaid rent | 8000 | 8450 |
Equipment | 177000 | 32450 |
Ordinary shares | -2,00,000 | |
Retained earning1/1/2019 | -34,000 | |
Dividend | 15000 | |
Account payable | -35000 | -2725 |
Home office | -51100 | |
Purchases | 1,90,000 | |
Shipment from home office | 104500 | |
Shipment to branch | -1,10,000 | |
Sales | -169000 | -144700 |
Operating expenses | 42000 | 24300 |
Total | 0 | 0 |
Notes:
1 | Cash of Branch = 10175 - 1700 + 1800 = 8475 |
2 | Home office= 51000- 1800 +1700 = 50900 |
3 | Goods in transit is not entered in trial balance as goods are not yet received by Branch. |
Combined Financial Statement of San and Branch | |||
Particulars | Amount | Particulars | Amount |
To Opening stock | 34000 | By Sales | 313700 |
(23000 + 11000) | (169000 + 144700) | ||
To Purchase | 190000 | By Closing stock | 39900 |
To operating expenses | 66300 | (30000 + 9900) | |
(42000 + 24300) | |||
To Net profit | 63300 | ||
353600 | 353600 |
Balance sheet of San Comapny as on 31st Dec,2019 | |||
Particulars | Amount | Amount | |
Ordinary shares | 200000 | Cash (22000 + 10275) | 32275 |
Retain earnings | 34000 | Accounts receivable (12000+7550) | 19550 |
Accouts payable (35000 + 2725) | 37725 | Dividend | 15000 |
P&L Account | 63300 | Inventory (30000+9900) | 39900 |
Allowances for valuation | 1000 | Investment in Branch | 60000 |
Home office | 51100 | Prepaid rent (8000+8450) | 16450 |
Shipment to branch | 5500 | Equipments (177000+32450) | 209450 |
(Refer note) | |||
392625 | 392625 |
Calculation of shipment | |
Shipment to branch | 110000 |
Shipment from home office | 104500 |
Shipment of branch | 5500 |