Advanced Accounting 2:: Home Office, Branch And Agency – General Procedures

ADVANCED ACCOUNTING 2: HOME OFFICE, BRANCH AND AGENCY – GENERAL PROCEDURES Submitted by: Alcantara, Jiezelle D. Baldueza, Jaciel B. Milan, Joymee M. Sicam, Coleen S. Tiongco, Helen Grace V. A3B - BSA

1. Papa Inc. of Makati opens a sales agency in Bacolod city and a working fund of P50,00 in establish on imprest basis. The first payment from the fund is P5,000 for rent of the store space. What is the entry in the books of the home office to record this transaction? a. Rent expense-Bacolod agency Cash b. Bacolod Agency Cash c. Rent expense-Bacolod agency Working fund d. No Entry

5,000 5,000 5,000 5,000 5,000 5,000

ANSWER: D. No Entry, because this is recorded when the working fund is replenished. 2. QC Company had an agency in Iloilo City. During the year, the transaction of the agency are summarize below: Sales 868,000 Disbursement: Purchases 800,000 Salaries 140,000 Rent 40,000 Supplies 20,000 Other Expenses 10,000 The agency had 200,000 receivables and 100,000 payables as of the end of the period. Also, there are inventories on hand of 180,000 and unused supplies of 12,000. The agency was setup as an experiment for 1year and would be closed if losses were incurred. The agency should be: a. b. c. d.

Reviewed again, because it was a break-even operation. Closed with the period’s operational loss of 310,000 Closed with the period’s operational loss of 118,000 Continued with the periods profit of 50,000

ANSWER: C. Closed with the period’s operational loss of 118,000 Sales Cost of goods sold: Purchases Merchandise inventory, end Gross profit Expenses Net income (loss)

P 700,000 P800,000 180,000

620,000 80,000 198,000 P (118,000) P

3. On June 1, 2013, Makati Company established a sales agency in Fairview, QC. Upon the establishment of the sales agency the Makati office sent merchandise samples costing 8,000 and a cash working fund of 3,000 to be maintained on the imprest basis. During the month of June, the sales agency reported to the home office sales order. These were billed at 70,000 of which 40,000 was collected. That the sales agency paid expenses of 2,800 but was reimbursed by the home office. On June 30, 2013, the sales agency samples were valued at 6,000. It was estimated that the gross profit on good ships to fill agency sales orders averaged 40% of cost. What is the net income of sales agency for the month ended June 30, 2013? a. b. c. d.

10,400 15,200 10,000 23,200 ANSWERS: B. 15,200 Sales Cost of goods sold (P70,000 / 140%) Gross profit Less: Samples (P8,000 – P6,000) Expenses Net income

P

70,000 50,000 P 20,000

P 2,000 2,800 P

4,800 15,200

4. On January 2, 2013, Jose Company established a sales agency in Pasig City. During the year the following transactions occurred: 1. Transfer of 10,000 worth of merchandise to Pasig agency to establish a working fund. 2. Receipts of sales orders from the agency, 100,000. 3. Collections of agency accounts by the Home office, 70,000. 4. Home office disbursements representing agency expense, 9,000. 5. Replenishment of the agency working fund upon receipts of expense vouchers for 4,500. 6. Cost of goods sold indentified with the agency sales, 72,000. What is the net income (loss) of the agency for the year, 2013? a. 14,500 b. 4,500 c. (14,500)

d. 14,000 ANSWER: A. 14,500 Sales Cost of goods sold Gross profit Expenses (P9,000 + P4,500) Net income

P 100,000 72,000 P 28,000 13,500 P 14,500

5. If all fixed assets are kept on the home office books, and the branch purchased equipment for 50,000 cash, the appropriate journal entry for the branch is a debit to: a. b. c. d.

Home Office account and a credit to Cash for 50,000. Investment in branch account and a credit to Cash for 50,000. Equipment and a credit to Cash for 50,000. Equipment and a credit to Home Office account for 50,000. ANSWERS: A. Home Office account and a credit to Cash for 50,000.

6. The Home Office allocates monthly depreciation to the branch on the branch’s fixed assets kept on the Home Office books. The April depreciation amounts to 7,500. The branch should this allocation by the following entry: a. Depreciation expense 7,500 Home Office 7,500 b. Depreciation expense 7,500 Accumulated Depreciation 7,500 c. Depreciation expense 7,500 Investment in branch 7,500 d. Home Office 7,500 Depreciation expense 7,500 ANSWER: A. Depreciation expense Home Office

7,500 7,500

7. The collection of a 5,000 branch receivable by the Home Office should be recorded by the branch with the following entry: a. No Entry is necessary, since the branch was not involved in the transaction. b. Cash 5,000 Home office 5,000

c. Home office 5,000 Accounts Receivable 5,000 d. Cash 5,000 Accounts Receivable 5,000 ANSWER: C. Home office Accounts Receivable

5,000 5,000

8. Luzon Corporation starts a branch operation in a nearby town. Merchandise costing 80,000 is shipped to this branch along with equipment costing 50,000. During the initial year, the home office assigns 8,000 in expenses to the branched. The branch sells 70% of the inventory that it received for 80,000 and remits 40,000 in cash to the Home Office. What is the correct Home Office account balance on the records of the branch? Closing entries have not been made. a. b. c. d.

98,000 104,000 122,000 178,000 ANSWER: A. 98,000 Shipment of merchandise to home office Equipment sent to home office Expenses assigned to branch by the home office Cash remittance to home office Home office account balance

P 80,000 50,000 8,000 (40,000) P 98,000

9. Just before the books are closed on December 31, 2013, the trial balances for the Home Office and branch contained the following account balances: Investment in Branch Home office

38,600 21,320

Your examination of accounts revealed the following information: 1. On December 26, the branch remitted 10,400 in cash to the Home Office that was not received until January 3. 2. Merchandise that was billed to the branch at 7,280 was in transit at December 31. 3. A cash payment of 400 on an open accounts receivable was received by the Home Office. The account, however, was carried on the books of the branch, the Home Office did not notify the branch of the cash collections.

What is the adjusted balance of the reciprocal accounts on December 31,2013? a. b. c. d.

29,000 49,000 39,000 28,200 ANSWER: D. 28,200

Unadjusted balances, Dec. 31 Remittance in transit Shipment in transit Cash collections of home office Adjusted balances, Dec. 31

(Branch Books) Home Office P 21,320 7,280 ( 400) P 28,200

(Home Office Books) Investment in Branch P 38,600 (10,400)

P 28,200

10. Manila Company, Inc. has been operating a branch in Cavite for a year. Shipments are billed to the branch at cost. The branch carries its own accounts receivable, makes its own collections, and pays its own expenses. On December 31, 2013, the branch books shows the following balances: Cash Home office Shipments from Home Office Accounts receivable Sales Expenses

8,500 35,000 135,000 25,000 147,000 13,500

The branch inventory on December 31,2013 is 18,500. On January 1, 2014, what are the balances of the following accounts in the books of the Home Office? a. b. c. d.

Investment In Branch 52,000 52,000 35,000 35,000

Shipments to Branch 0 135,000 0 135,000

ANSWER: A. Investment In Branch 52,000

Shipments to Branch 0

Home Office account balance before closing, Dec. 32, 1008P 35,000 Net income (loss) Sales P147,000 Cost of cost goods sold Shipment to branch P135,000 Inventory, 12/31 18,500 116,500 Gross profit P 30,500 Expenses 13,500 17,000 Home Office account balance (Investment in Branch account balance) P 52,000 Shipment to Branch account has no beginning balance, because this was closed at the end of 2008. 11. On December 31, 2013 the branch manager of Jenna Company in Iloilo city submitted the following data to the Home office in Manila: Petty Cash Fund Sales Shipments from Home office Accounts receivable, January 1, 2013 Inventory, January 1, 2013 Inventory, January 1, 2013 Expenses

6,000 390,000 270,000 86,000 74,000 82,000 96,000

All cash collected on accounts receivable amounting to 378,000 were remitted to the Home Office. What is the balance of the Home Office account on:

a. b. c. d.

January 1, 2013 270,000 166,000 166,000 270,000

January 1,2014 186,000 186,000 88,000 88,000

ANSWER: B. January 1, 2013 166,000 Petty cash fund Accounts receivable Inventory Home Office account balance

January 1,2014 186,000 Jan. 1, 2008 P 6,000 86,000 74,000 P166,000

Jan. 1, 2009 P 6,000 98,000 82,000 P186,000

12. A reconciliation of the investment in Tarlac branch account of Manila Company and the Home Office account carried in the books of the branch shows the following discrepancies at December 31, 2013: 1. A credit from merchandise allowance for 3,000 was taken by the branch as 3,600. 2. A charge by the branch of 5,500 for an advance taken by the president when he visited the branch as not yet been recorded by the Home Office. 3. The branch has not taken up 9,000 covered by a debit memo from the Home Office as share in advertising expenses. The investment in Tarlac branch account in the Home office books had a debit balance of 430,000 at December 31, 2013. The reciprocal accounts were in agreement at the beginning of the year. What is the unadjusted balance of the Home Office account in the books of the branch on December 31,2013? a. b. c. d.

414,900 419,900 429,500 404,900 ANSWER: A. 414,900

Unadjusted balance – Investment in Branch account, 12/31 Charge for advances by president Erroneous entry for merchandise allowance Share in advertising expense Unadjusted balance – Home Office account, 12/31

P430,000 (5,500) ( 600) (9,000) P414,900

13. A reconciliation of the investment in branch account in the Home Office of Makati Company and the Home Office account carried on the branch books showed the following discrepancies at December 31, 2013: a. Collections of branch accounts receivables by the Home Office 8,000 the branch were not notified. b. Shipment in transit to branch in December 31,2013, 32,000. c. Acquisition of the furniture by the branch 12,000. The fixed assets account to be maintained on the Home office books. The home office had not been notified as such acquisition. d. Return of excess merchandise by the branch but not received yet by the home office, 15,000. e. Cash remittance by the branch on December 31, 2013 was in transit, 5,000.

f. The balance of the Home Office account in the books of the branch on December 31, 2013 is 440,000. Compute the following balances on December 31,2013: Unadjusted balance of Investment in Branch Account 464,000 496,000 474,000 501,000

Adjusted balances

ANSWER: A. Unadjusted balance of Investment in Branch Account 464,000

Adjusted balances

a. b. c. d.

Unadjusted balances Branch AR collected by Home Office Shipments in transit Acquisition of furniture Merchandise returns Cash remittance in transit Adjusted balances

464,000 472,000 474,000 472,000

464,000 (Branch Books) Home Office P 440,000 ( 8,000) 32,000

P 464,000

(Home Office Books) Investment in Branch P 496,000

(12,000) (15,000) ( 5,000) P 464,000

14. On December 31,2013, the Investment in branch account on the home office’s books has a balance of 85,000. In analyzing the inter-company transactions recorded in each of these accounts for December, you discover the following discrepancies: 1. A P10,000 branch remittance to the home office initiated on December 27,2013, was recorded on the home office books on January 4,2014. 2. A home office merchandise shipment to the branch on December 29,2013 was recorded by the branch on January 5,2014. The cost of this merchandise is P20,000. 3. The home office incurred P12,000 of advertising expenses and allocated P5,000 of this amount to the branch on December 15,2013. The branch has not recorded this transaction. 4. A branch customer erroneously remitted P3,000 to the home office. The home office recorded this cash collection on December 23,2013. Meanwhile, back at the branch, no entry has been made yet. 5. Merchandise costing P43,000 was sent to the branch by the home office on December 10,2013. The billing was at cost, but the branch recorded the transaction at P34,000.

Compute the following balances as of December 31,2013: Unadjusted balance Adjusted Balances Of the Home Office Account a. P64,000 P95,000 b. P26,000 P16,000 c. P44,000 P75,000 d. P44,000 P78,000 ANSWER: C.

Unadjusted balance Of the Home Office Account P44,000

Unadjusted balance- Investment in Branch account Remittance in transit Shipment in transit Expenses allocated Error in recording remittance Error in recording shipments Unadjusted balance – Home Office account

Unadjusted balances, Remittance in transit Shipment in transit Expenses allocated Unrecorded HO collection of AR Error in recording shipments Adjusted balances

( Branch Books) Home Office P 44,000 20,000 5,000 (3,000) 9,000 P 75,000

Adjusted Balances P75,000

P 85,000 (10,000) (20,000) ( 5,000) 3,000 ( 9,000) P 44,000 (HomeOffice Books) Investment in Branch P 85,000 (10,000)

P 75,000

15. Miguel Corporation operates a branch in Cebu. In October, the home office shipped P34,000 merchandise to this branch. Although the home office made the correct journal entry, the branch credited its Home Office account for P43,000. In November, the branch collected P1,000 on an accounts receivable for the home office. The home office was properly notified but debited Investment in Branch account for P4,000. At the end of the year, the home office paid and recorded a P6,000 expense for the branch but the branch as not yet made the appropriate entry. Also, at year’s end, the branch conveyed P25,000 in cash to the home office but the home office has not yet made the necessary entry. What corrections are needed?

a. The home office needs to credit its Investment in Branch account for P24,000 and the branch needs to debit its Home Office account for P9,000. b. The home office needs to credit its Investment in Branch account for P30,000 and the branch needs to debit its Home Office account for P3,000. c. The home office needs to credit its Investment in Branch account for P22,000 and the branch needs to debit its Home Office account for P15,000. d. The home office needs to credit its Investment in Branch account for P28,000 and the branch needs to debit its Home Office account for P3,000. ANSWER: D. The home office needs to credit its Investment in Branch account for P28,000 and the branch needs to debit its Home Office account for P3,000.

1. 2. 3. 4. 5.

16. Candy Corporation, operates a number of branches in Metro Manila. On June 30,2013,its Nova branch showed a Home Office account balance of P27,350 and the home office books showed Investment in Nova Branch account balance of P25,550. The following data were discovered in reconciling the two reciprocal accounts: A P12,000 shipment, charged by the home office to Nova Branch, was actually sent to and retained by QC branch. A P15,000 shipment, intended and charge to Bulacan branch was shipped to Nova branch. The home office collects a Nova branch accounts receivable of P3,600 and fails to notify the branch. The home office was charged for P1,200 for merchandise returned by Nova branch on June 28. The merchandise is in transit. The home office erroneously recorded Nova branch’s net income for May at P16,275. The branch reported a net income of P12,675.

What is the reconciled amount of the Home Office and Investment in Nova Branch accounts? a. b. c. d.

P23,750 P21,750 P27,350 P20,150

ANSWER: A. P23,750

Unadjusted balances

(Branch Books) Home Office P25,550

(Home Office Books) Investment in Branch P27,350

Error in recording shipment to Cavity branch Error in recording shipment to Tagaytay branch Branch AR collected by home office Merchandise returns in transit Error in recording branch profit Adjusted balances

(12,000) 15,000 (3,000) ( 1,200) ( 3,600) P23,750

P23,750

17. On December 31,2013 the Investment in Branch account on the home office books of the Lady Company shows a balance of P84,000, and the Home Office account on the books of the branch shows a balance of P97,350. The following data are determined in accounting for the difference. 1. Merchandise billed at P6,150 was shipped by the home office to the branch on December 28. The merchandise is in transit and had not been recognized on the books of the branch. 2. The branch collected a home office accounts receivable of P25,000, but failed to notify the home office of this collection. 3. The home office recorded incorrectly the branch net income at P11,250. The branch reported net income of P12,150. 4. The home office was charged P6,400 when the branch returned merchandise to the home office on December 31. The merchandise is in transit. What is the reconciled amounts of the reciprocal accounts on December 31? a. P103,500 b. P102,600 c. P78,500 d. P97,350 ANSWER: A. P103,500

Unadjusted balances, 12/31 Shipment in transit Collection of HO A/R by branch Error in recording of branch profit Returns of merchandise in transit Adjusted balances, 12/31

(Branch Books) Home Office P 97,350 6,150

P103,500

(Home Office Books) Investment in Branch P 84,000 25,000 900 ( 6,400) P103,500

18. Best By Ventures operates a branch in Cebu, City. Selected accounts taken from the May 31,2016 statements of Best Buy and its branch follow: Sales Shipments to branch Shipments to branch—loading Inventory, June 1,2015 Purchases Shipments from home office Inventory, May 31,2016

H/Office P380,000 150,000 39,500 24,000 300,000 28,000

Branch P353,000 16,000 60,000 187,500 20,700

The branch ending inventory included items costing P8,700 that were acquired from outside supplies. The realized markup on branch merchandise that would be recognizes by the home office is: a. P36,000 b. P36,700 c. P37,100 d. P37,500 ANSWER: C. P37,100 Shipments to branch- loading/allowance for overvaluation of merchandise before adjustments

39,500

Less: Allowance for overvouchers of ending inventory (after adjustment): (P20,700- p8,700) x 25/125*

2,400

Realized mark up on branch merchandise

37,100

19. The Bicol Corporation operates a branch in Naga City. The information from the December 31,2016 trial balance are as follows: Home Office Naga Branch Sales P840,000 P420,000 Shipments to branch 280,000 Purchases 490,000 Shipments from home office 350,000 Inventory, January 1,2016 140,000 56,000 Inventory at December 31, Home Office P42,000: Branch, P84,000

Compute the realized inventory profit of home office from sales made by the branch (the overvaluation of cost of goods sold)? a. b. c. d.

P56,000 P120,400 P64,400 P80,000

ANSWER: C. 64,400 Inventory, January 1,2016

56,000

Add: Shipments from home office

350,000

Cost of goods available for sale

406,000

Less: Inventory, December 31,2016

84,000

Cost of goods sold at billed price

322,000

Multiplied by: Mark-up on cost (P350,000- P280,000)/P350,000

20%

Overvaluation of cost of goods sold

P64,400

20. The Quezon City branch of Asser Enterprises, Manila was billed for merchandise shipments from home office at cost plus 25% in 2015 and cost plus 20% in 2016. Other pertinent data for 2016 show: Quezon City Branch Home Office Sales P63,000 P212,000 Inventory beginning at cost 23,000 at billed price 8,900 Purchases 164,000 Inventory transfers To Quezon City, at cost 42,000 From Manila, at billed price 50,400 Inventory, end At cost 28,500 At billed price 11,700 Expenses 20,300 76,400 Compute the (1) realized inventory profit from branch sales (or overvaluation) of cost of goods sold, and (2) The ending inventory that should be presented in the combined income statement.

a. b. c. d.

(1) 8,230; (2) 40,200 (1) 8,230; (2) 38,250 (1) 7,933; (2) 38,250 (1) 9,520; (2) 37,860

ANSWER: B. (1) 8,230; (2) 38,250 1. Realized profit from branch sales: Inventory, beginning (8,900 x 25/125) Add: Shipments (50,400 x 20/120) Total Less: Inventory, ending (11,700 x 20/120) Realized Inventory profit from branch sales 2. Ending Inventory in the Income Statement Home Office Branch: (11,700 x 100/120)

1,780 8,400 10,180 1,950 8,230 28,500 9,750 38,250

21. The National Home Company ships and bills merchandise to its provincial branch at cost. The branch carries its own accounts receivable and makes its own collections. The branch also pays its expenses. The transactions for 2016 are reflected in the branch trial balance that follows: Debit

Credit P 11,900 P 90,000

Cash National Home Co. Current Shipments from National Home Co. 120,000 Accounts Receivable 62,500 Expenses 8,100 Sales 112,500 Total 202,500 202,500 Compute the (1) net profit of the branch, and (2) the branch current account in the home office books. a. (1) 22,500 (2) 90,000 b. (1) 21,300 (2) 134,400 c. (1) 14,400(2) 104,400 d. (1) 14,400 (2) 90,000 Answer: C. (1) Net profit of the branch: Sales Less: COGS Shipments from home office

112,500 120,000

Less: Inventory December 31 30,000 Gross Profit Less: Expenses Net Income (2) Branch Current Account 12-31-16 National Home Company Current before Net income of the branch Add: Net Income of the branch as reported National Home Company Current/Branch Current

90,000 22,500 6,100 14,400 90,000 14,400 104,400

22. The Robert Company established its Bulacan branch in January 2016. During its first year of operations, home office shipped to its Bulacan Branch merchandise worth P 130,000 which included a mark –up of 15%on cost. Sales on account totaled P 250,000 while cash sales amounted to P 80,000. Bulacan reported operating expenses P 38,000 and ending inventory P 15,000 at billed price. In so far as the home office is concerned, the real net income of Bulacan is: a. b. c. d.

82,000 147,000 177,000 192,000

Answer: D. Sales (250,000+80,000) Less: COGS at cost: Shipments from home office Cost of goods sold at billed price Multiplied by: Cost ratio Gross Profit Less: operating expenses Net Income of the branch in so far as the Home office is concerned

330,000 130,000 15,000 115,000 100/115

100,000 230,000 38,000 132,000

23. The Clark Branch of Freeport Corporation submitted the following trial balance as of June 30 2016 Debit Credit Cash P 28,600 Accounts Receivable 173,800 Shipments From home office 462,000 Home Office Current 324,500 Sales 369,600 Expenses 29,700 _______

Total

694,100

694,100

Clark reported an ending inventory of P 138,600. Shipments are billed at a mark up of 40% on cost. What is the real net income clark beanh? a. b. c. d.

70,600 92,400 100,000 108,900

Answer: D. Sales Less: COGS Shipments from home office, at cost (462,000*100/140) Less: ending inventory, at cost (138,600*100,140) Gross Profit Less: expenses Real net income of the branch

369,600 330,000 99,000

231,000

138,600 29,700 108,900

24. Tillman Textile Company has a single branch in Bulacan. On March 1, 2016 the home office accounting records included an allowance for overvaluation of inventories – Bulacan Branch ledger account with a credit balance of P 32,000. During March, merchandise costing P 36,000 was shipped to Bulacan branch and billed at a p[rice representing 40% mark up on the billed price. On March 31,2016 the branch prepared an income statement indicating a net loss 0f mP 11,500 for March and ending inventories at billed prices of P 25,000. What is the adjustment for the allowance for overvaluation of inventories to reflect the true branch net income? a. P 39,257 dr b. P 46,000 cr c. P39,333 dr d. P 46,000 dr Answer: D. Merchandise Inventory, March 1, 2016 Add: Shipments (36,000/60% = 60,000*40%note: markup is based on billed price)

32,000

Cost of goods sold: Less: Merchandise inventory March 31, 2016 (25,000*40%)

58,000

24,000

10,000

Overvaluation of CGS/ Realied the gross profit on branch sales

46,000

25. Jaimee Marketing co, opened a branch in san Fernando City at the beginning of 2016. The branch extends credit, makes collections, pays expenses from cash receipts and acquires goods exclusively from home office. During 2016, goods shipped by the home office to the branch at the billing price of 125% of cost amounted to P 104,000 of which P 12,500 remained in the branch’s year end inventory. Other branch transaction in 2016 were as follows: sales, all on credit, P 117,430, expenses of which P1,500 are unpaid at year end, P 20,000, collections on account after deducting P 1,480, P 84,000, and total remittances to the home office P 62,500. As far as the home office is concerned, the operations of the branch resulted into: a. P 4,450 net income b. P 9,550 net loss c. P 18,300 net income d. P 22,750 net income Answer: D. Sales Less: Sales Discount Net Sales Less: Cogs: Shipments from home office, at cost (104,000*100/125) 83,200 Less: ending inventory, at cost (12,500*100/125) 10,000 Gross Profit Less: Expenses Branch results of operation in so far as the Ho is concerned

117,430 1,480 115,950

73200 42,750 20,000 22,750

26. The Gift Co, has a branch in Dipolog City. During 2016 the home office shipped to the branch merchandise billed at P 150,000 including a markup of 20% on cost. The branch reports opening and closing inventories of P 90,000 and P 120,000 respectively, while the home office has a closing inventories of P 210,000 which includes merchandise held on consignment valueds at P 10,000. Both locations use the periodic inventory system. What closing inventory would be reported in the combined income statement for the year 2016? a. P 296,000 b. P 300,000 c. P 320,000 d. P 330,000 Answer: B. Ending inventory: Branch (120,000*100/120)

100,000

Home office (210,000-10,000)

200,000 300,000

27. Lacoste Philippines has two merchandise outlets, its main store in Manila and its Cebu City Branch. For control purposes all purchases are made by the main store and shipments to the Cebu City branch are at cost plus 10%. On January 1, 2016 the inventories of the main store and the Cebu city branch were P 13,600 and P 3,960 respectively. During 2016 the main store purchased merchandise P 40,000 and shipped 40% of these to the Cebu City branch. At December 31, 2016 the following journal entry was made to prepare the Cebu City branch books for the next accounting period. Sales Inventory Inventory Shipments from main store Expenses Main Store

32,000 4,840 3,960 17,600 10,480 4,800

What was the actual net income of 2016 on a cost basis, assuming the use of the provisions of the PAS? a. 4,800 b. 6,330 c. 6,320 d. 6,480 Answer: C. Actual Branch Income: Sales 32,000 Less: cogs Inventory Jan. 1 at billed price 3,960 Shipments from main store at billed price 17,600 Cost of goods available for sale At billed price 21,560 Less: inventory December 31, At billed price 4,840 Cogs at billed price 16,720 Multiplied by: cost ratio 100/110 15,200 Gross Profit 16,800 Less: expenses 10,480 True branch net income 6,320 28. Using problem no. 27, If the main store has P 11,200 worth of inventory that should appear on the combined balance sheet at December 31, 2016? a. 15,630 b. 15,160

c. 15,600 d. 16,040 Answer: C. Ending inventory at cost: Home office Branch: (4,480*100/110) Combined ending inventory

11,200 4,400 15,600

29. Best Buy Ventures operates a branch in Cebu City. Selected accounts taken from the May 31, 2016 statements of best buy and its branch follow: Home Office Branch Sales 380,000 353,000 Shipments to branch 150,000 ----Shipments to branch – loading 39,500 ----Inventory, June 1, 2015 24,000 16,000 Purchases 300,000 60,000 Shipments from home office ----187,500 Inventory, May 31, 2016 28,000 20,700 The branch ending inventory included items costing P 8,700 that were acquired from outside suppliers. The realized markup on branch merchandise that would be recognized by the home office is: a. 36,000 b. 36,700 c. 37,100 d. 37,500 Answer: C. Shipments to branch-loading/allowance for overvaluation Of merchandise before adjustments Less: allowance for overvaluation of ending inventory (after adjustments) : (20,700-8,700) * 25/125 Realized markup on branch merchandise

39,500 2,400 37,100

30. Fisher Company opened its Tuguegarao Branch on January 1, Merchandise shipments from home office during the month billed at 120% of cost, is P 125,000. Branch returned damaged merchandise worth P 15,620. On January 31, the branch reported a net loss of of P 84,000. What is the net income or loss of the branch to be taken up in the books of the home office? a. (P 1,490) b. 6,500 c. (P 2,270)

d. 1,960 Answer: (D.) Net income (loss) per branch books Add: Realized Profit from sales made by the branch/ Overvaluation of cost of goods sold: Beginning Inventory Add: Shipments Less: Returns Cost of good available for sale at billed price Less: Ending Inventory, at billed price Cost of goods sold at billed price Multiplied by markup Adjusted Branch net income

(2,270) 125,000 15,620 109,380 84,000 25,380 20/120

4,230 1,960

31. The Aparri branch of Cagayan Products, Inc. buys merchandise from third parties and receives merchandise from the home office for which it is billed at 20% above cost. Below are excerpts from the trial balances and data on the home office and Aparri branch for the month just ended: Home Office books: Cr. Allowance for overvaluation of branch merchandise………… P 740, 000 Cr. Shipment to branch…………………………………………….1, 700, 000 Branch books: Dr. Beg. Inventory…………………………………………………2, 880, 000 Shipments from home office……………………………………2, 040, 000 Purchases………………………………………………………..

820, 000

Month-end additional data: Ending inventory of branch………………………………………...2, 920, 000 From home office at BP…………………………………….2, 340, 000 From outsiders, at cost……………………………………...

580, 000

For the month just ended: The total cost of goods sold of

The amount of allowance for

Aparri branch at cost

overvaluation that was realized

(net of overvaluation)

from branch sales

a. P 2, 820, 000 b. 2, 470, 000 c. 2, 770, 000 d. 2, 470, 000

P 400, 000 350, 000 740, 000 390, 000

ANSWER: B SOLUTION: Cost of goods sold at cost: Beginning inventory…………………………………………….. P2, 880, 000 Add: Shipment from home office……………………………….... 2, 040, 000 Purchases………………………………………………….

820, 000

Cost of goods sold available for sale……………………………………… P5, 740, 000 Less: Ending Inventory……………………………………………………. 2, 920, 000 Cost of goods sold with intercompany profit……………………………… P2, 820, 000 Less: Realized profit from sales made by branch/ overvaluation Of cost of goods sold: Allowance for overvaluation before adj………….. P740, 000 Less: Allowance for ending inventory P2, 340, 000 x 20/120……………………… 390, 000

350, 000 (b)

Cost of goods sold at cost…………………………………………………..P2, 470, 000 (b)

32. The Quezon City Sales Company established a branch in Dumaguete City early last year. It shipped merchandise and billed the branch for P300, 000 prior to its opening. For the year, it made additional shipments at billed price of P120, 000. Within the year, the branch shipped back P7, 500 inventories and got the credit memo for said returns. On the last working day of the year, an inventory count was made. Ending inventory of P185, 000 was established consisting of purchases from third parties at P20, 000, with the balance coming from home office shipments at billed price. The home office billed the branch at 20% above cost. The total purchases at the branch from outside suppliers amounted to P72, 500. The total goods available for sale by the branch at cost net of overvaluation and returns amounted to: a. P416, 250

b. c. d.

422, 500 435, 200 485, 000

ANSWER: A SOLUTION: Cost of goods available for sale at cost: Shipments from home office………………………………………….. P300, 000 Additional shipments………………………………………………….

120, 000

Returns to home office…………………………………………………

(7, 500)

Shipments from home office at billed price (net of returns)………….. P412, 500 Multiplied by: Cost Ratio……………………………………………… 100/120 Shipments from home office at cost……………………………………P343, 750 Purchasers from outsiders at cost……………………………………….

72, 500

Cost of goods available for sale, at cost………………………………... P416, 250 (a)

a. b. c. d.

33. The home office of Glendale Company, which uses the perpetual inventory system, bills shipments of merchandise to the Montrose branch at a markup of 25% on the billed price. On August 31, 2016, the credit balance of the home office’s allowance for overvaluation of inventories – Montrose branch le4dger account was P60, 000. On September 17, 2016, the home office shipped merchandise to the branch at a billed price of P400, 000. The branch reported on ending inventory, at billed price, of P160, 000 on September 30, 2016. Compute the realized gross profit. P20, 000 28, 000 120, 000 160, 000

ANSWER: C SOLUTION: Merchandise inventory, August 31, 2016…………………………………… P60, 000 Add: shipments (P400, 000 X 25% - note: markup is based on billed price)…………………………………………………………… 100, 000 Cost of goods available for sale……………………………………………….P160, 000

Less: Merchandise inventory, Sept. 30, 2016 (P160, 000 x 25%)……………………………………………………..

40, 000

Overvaluation of CGS / Realized the gross profit on branch sales…………… P120, 000 (c)

a. b. c. d.

34. Charity, Inc. established first branch on May 1, 2016. During the first month of operation, the home office shipped merchandise to the branch worth P138, 000 which included a markup of 15% on cost. Sales for cash were P80, 000 while sales on account were P250, 000. At month’s end, the branch reported operating expenses of P38, 000 and a closing inventory of P23, 000 at billed price. As for as the home office is concerned, the true branch net income for May 2016 is: P82, 000 147, 000 177, 000 192, 000

ANSWER: D SOLUTION: Sales (P80, 000 + P250, 000)……………………………………………………. P 330, 000 Less: Cost of goods sold: Shipment from home office, at cost (P138, 000 x 100 / 115)…………………………….P120, 000 Less: Ending inventory, at cost (P23, 000 x 100 / 115)………………………………

20, 000

100, 000

Gross Profit………………………………………………………………………...P230, 000 Less: Operating expenses……………………………………………………….....

38, 000

True Branch Income………………………………………………………………..P192, 000 (d)

35. The account balances shown below were taken from the trial balances submitted to Bon-Apetit Corporation by its Alabang branch: 2015

2016

Petty Cash Fund………………………………………………P1, 500

P1, 500

Accounts Receivable………………………………………….43, 800

49, 140

Inventory………………………………………………………

-

37, 170

Sales………………………………………………………….173, 180

195, 120

Shipments from home (140% at cost)………………………..107, 450

136, 080

Expenses……………………………………………………... 51, 260

57, 930

Accounts written off………………………………………….. 1, 220

1, 920

All ranch collections are remitted to the home office. All branch expenses are paid out of the petty cash fund. When the petty cash fund is replenished, the branch debits appropriate expense accounts and credits home office current. The petty cash is counted every December 31, and its composition was as follows:

12/31/15

12/31/16

Currency and coins…………………………………………….P580

P860

Expense vouchers……………………………………………… 920

640

The branch inventory in December 31, 2016 was P41, 370. The correct of branch net income for 2016 was: a. P3, 390 b. 3, 670 c. 41, 070 d. 41, 350 ANSWER: D SOLUTION: Sales………………………………………………………………………………P195, 120 Less: Cost of goods sold, at cost: Inventory 1/1/16 at cost (P37, 170 x 100/140)…………………………… P26, 550 Add: Shipments at cost (P136, 080 x 100/140)………. 97, 200 Cost of goods available for sale……………………...P123, 750

Less: Inventory, 12/31/16, at cost (P41, 370 x 100/140)…………………………. 29, 550

94, 200

Gross Profit………………………………………………………………………...P100, 920 Less: Expenses (P57, 930 + P1, 920* + P280**)………………………………….

59, 570

Correct branch net income………………………………………………………….P41, 350 (d) *Direct write off was used in recording doubtful accounts since there is no allowance account given in the trial balance. **There as a P280 reduction on unreimbursed petty cash expense vouchers, incidentally, the entry for the adjustment would be: Petty cash………………………………………. 280 Expense……………………………………………….. 280

36. Hope Corporation started operating a branch on May 1, 2016 with a shipment of merchandise billed at P250, 000. Additional shipments during the month were billed at P125, 000. The branch returned damaged merchandise worth P10, 000. Interoffice shipments are billed uniformly at 125% of cost. On May 31, 2016, the branch reported a net loss of P52, 500 and an inventory of P150, 000. What is the branch net income (loss) reflected in the combined income statement for May, 2016? a. P(9, 500) b. 43, 000 c. (52, 500) d. 95, 000 ANSWER: A SOLUTION: Branch reported net loss……………………………………………………. P(52, 500) Add: overvaluation of cost of goods sold/realized profit from sales made by branch: Shipments at cost (P250, 000 + P125, 000 - P10, 000) x 25/125…………………….. P73, 000

Less: Inventory, 5/31/2004 (P150, 000 x 25/125)…………………….. 30, 000

43, 000

True branch net loss………………………………………………………….P(9, 500) (a)

37. The Best Co. bills merchandise shipments in its Cavite City branch at 125% of cost. The branch, in turn, sells the merchandise it receives from the home office at 25% above the billing price. On August 1, 2016, all the branch’s merchandise stock was destroyed by fire. The branch records that were recovered showed the following: Inventory, January 1, 2016 (at billed price)…………………………………P165, 000 Shipments received from home office, January to July (at billed price)…… 110, 000 Purchases at cost, from outside sources, all re-sold at a 20% markup………

7, 500

Sales………………………………………………………………………….. 169, 000 Sales returns and allowances………………………………………………….

3, 750

The Best Co. will file an insurance claim. How much is the estimated cost of the merchandise destroyed by fire? a. P120, 000 b. 130, 000 c. 140, 000 d. 150, 000 ANSWER: A SOLUTION: Inventory, Jan. 1, at billed price…………………………………………… P165, 000 Shipments received from home office at billed price……………………… 110, 000 Cost of goods available for sale at billed price…………………………….. P275, 000 Less: Cost of goods sold from home office at billed price: Sales………………………………………….. P169, 000 Less: Sales of returns and allowances……….. Sales price of merchandise purchased

3, 750

from outsiders (P7, 500 x 120%)

9, 000

Net sales of merchandise acquired from home office…………………………….. P156, 250 Multiplied by: Intercompany cost ratio………..

100/125

125, 000

Inventory, Aug. 1, 2016, at billed price……………………………………...P150, 000 Multiplied by: Cost Ratio……………………………………………………. 100/125 Merchandise inventory at cost destroyed by fire…………………………….P120, 000 (a)

38. On August 31, 2016, a fire destroyed totally the rented “bodega” or stockroom of Isabela Company. The following are some of the data of the company: Merchandise inventory, Dec. 31, 2015……………………………………….P110, 000 For the period Jan. 1 – Aug. 31, 2016: Purchases……………………………………………………………… 560, 500 Freight In……………………………………………………………….

5, 600

Purchases returns………………………………………………………. 10, 200 Sales……………………………………………………………………..695, 000 Sales returns and allowances……………………………………………

7, 500

Using a profit of gross profit rate, the cost of the merchandise lost in the fire was: a. P90, 700 b. 115, 900 c. 88, 400 d. 63, 200 ANSWER: B SOLUTION: Merchandise inventory, Dec. 31, 2015……………………………………….P110, 000 Add: Net Purchases: Purchases……………………………………..P360, 500

Add: Freight In………………………………..

5, 600

Total…………………………………………..P566, 100 Less: Purchase returns………………………..

10, 200

555, 900

Cost of goods available for sale………………………………………………...P665, 900 Less: Cost of goods sold: Net sales (P695, 000 – P7, 500)………………P687, 500 Multiplied by: Cost Ratio……………………..

80%

550, 000

Merchandise Inventory, Aug. 31, 2016, loss due to fire…………………………P115, 900 (b) 39. Best Buy Ventures operates a branch in Cebu City. Selected accounts taken from the May 31, 2016 statements of Best Buy and its branch follow: H/Office

Branch

Sales……………………………………………… P380, 000

P353, 000

Shipments to branch……………………………… 150, 000

-

Shipments to branch – loading……………………

39, 500

-

Inventory, June 1, 2015…………………………...

24, 000

16, 000

Purchases…………………………………………. 300, 000

60, 000

Shipments from home office……………………… Inventory, May 31, 2016………………………….

28, 000

187, 500 20, 700

The branch ending inventory included items costing P8, 700 that were acquired from outside suppliers. The realized markup on branch merchandise that would be recognized by the home office is: a. P36, 000 b. 36, 700 c. 37, 100 d. 37, 500 ANSWER: C SOLUTION:

Shipments to branch – loading / allowance for overvaluation of merchandise before adj……………………………………………………… P39, 500 Less: Allowance for over vouchers of ending inventory (after adjustments): (P20, 700 – P8, 700) x 25/125*……………………

2, 400

Realized markup on merchandise………………………………………………. P37, 100 (c) *Since there are no shipments in transit and there was no error in recording shipments, therefore, the shipments from office account was correctly recorded, so, to compute for the billing price would be: P187, 500/P150, 000 = 25%. Markup on cost would be 25%. 40. On December 31, 2016, the following data are in the records of the Cebu City branch of the Claire Company: Petty cash ……………………………………………………………… P 94, 500 Account Receivable, Dec. 31, 2015 ……………………………………

85, 200

Merchandise Inventory, Dec. 31, 2015…………………………………

75, 500

Accounts Receivable, Dec. 31, 2016…………………………………… 88, 800 Merchandise Inventory, Dec. 31, 2016………………………………....

81, 000

Sales……………………………………………………………………. 272, 700 Sales Returns……………………………………………………………

4,800

Accounts Receivable written off………………………………………..

2, 000

Shipments from Home Office………………………………………….. 220, 600 Expenses (Paid by Home Office)………………………………………..

22, 500

If all cash collection in 2016 were remitted to Home Office, the total remittances amounted to: a.

262, 300

b.

266, 800

c.

264, 300

d.

267, 100

ANSWER: A

SOLUTION: Accounts Receivable, 12/31/15…………………………………………. P85, 200 Add: Sales on account………………………………………………….... 272, 700 Total……………………………………………………………………... P357, 900 Less: sales returns……………………………….. P4, 800 Accounts receivable written off………….

2, 000

Accounts receivable, 12/31/16…………..

88, 800

95, 600

Collections remitted to home office…………………………………….. P262, 300 (a) 41. A branch store in Caloocan was established by Carlo Company on March 1. Merchandise was billed to the branch at 125% of cost. Shipments of merchandise were as follows: March 5 ……………………………………… March 10 …………………………………….. March 20 ……………………………………..

P 120,000 (at billed price) 50,000 (at billed price) 35,000 (at billed price)

On March 22, the branch returned defective merchandise worth P3,050. On March 31, the branch reported a net loss of (P6,200 and merchandise inventory of P85,000. In the home office books, the cost of merchandise sold by branch was: A. B. C. D.

P 161,560 P116,950 P93,560 P 161,950

ANSWER: B. 93,560 Shipments from office (P120000 + P50,000 + P35,000) …………….. Less: Returns …………………………………………………………. Shipments from office (net of returns) ……………………………….. Less: Inventory 3/3 …………………………………………………… COGS at billed price …………………………………………………. Less: Allowance for mark-up included in the cost of goods sold Of realized profit from branch sale (P116950 x 25/125) ……. COGS sold made by branch ………………………………………….

P205000 3050 P201950 85000 P116950 23390 P 93650 (b)

42. Leila Co.’s Clark branch submitted the following data for 2016, its first year of operation:

Sales ………………………………………… Shipments from home office …………………. Operating Expenses ………………………….. Home Office –current …………………………

P203,500 Cr. 186,120 Dr. 18755 Dr. 48,125 Cr.

Shipments to the branch are billed at cost. The December 31 inventory of the branch was P25,245. What is the correct balance on December 31, 2016 at the branch Account- current as per home office books? A. B. C. D.

P46,750 P65,505 P48,125 P71,995

ANSWER: D P71,995 Home Office Current Account before branch Net income ……………………………………… P48, 125 Add: Net Income of the branch as reported: Sales …………………………………… P203,500 Less: COGS Shipments from HO……………… P186,120 Less: Inventory, 12/31 ………….. 25,245 160,875 Gross profit …………………………… P 42,625 Less: Operating Expenses …………… 18,755 23,870 HO Current Account/Branch Current. 12/31…………………………….. P71,995 (d) 43. The following information pertains to shipments of merchandise from home office to branch during 2016: Home office cost of merchandise ………………….. P160,000 Intracompany billing ………………………………. 200,000 Sales by branch ……………………………………. 250,000 Unsold merchandise at Branch on Dec 31, 2016 ……………………………… 20,000 In the combined income statement of Home office and branch for the year ended December 31, 2016, what amount of the above transactions should be included in sales? A. 250,000 B. 230,000 C. 200,000 D. 18,000 ANSWER: A. P250,000 In the preparation of combined income statement of home office and branch, all intercompany transactions should be eliminated as if it had never occurred. Therefore, the only transaction

that should remain are transaction to unrelated customer, i.e, P250,000 sales by branch to outsider. 44. Barros Corporation’s shipments to and form its Brazil City branch are billed at 120% cost. On December 31, Brazil branch reported the following data, at billed prices: inventory, Januray 1, of P33,600; shipments received from home office of P840,000; shipments returned of P48,000; and inventory. December 31, of P36,000. What is the balance of the allowance for overvaluation of branch inventory on December 31 before adjustments? A. P5,600 B. P137,600 C. P6,000 D. P145,600 ANSWER:

B. P137,600

Inventory, January 1 ………………………………….. Add: Shipments from office, net of returns (P840,000 – P48,000) ………………………... Cost of good available for sale ………………………. Multiplied by mark-up ………………………………. Allowance for overvaluation before adjustments…….

P 33,600 792,000 P 825,600 20/120 P137,600 (b)

45. The Cindy owns the Highest crown in Dipolog City and a branch in Dapitan City. During 2016, the home office shipped to the branch supplies costing P120,000 at a billed price of 20% above cost. The inventories of supplies at the branch were as follows: January 1,2016.P90,000; December 31,2016, P108,000. On December 31,2016 the home office holds inventories of P160,500 which includes P10,500 held on consignment. Both locations use the periodic inventory method. How much is the inventories in a combined balance sheet as of December 31 2016? ANSWER:

B. P240,000

Inventory, Dec. 31,2016 in the Combine balanaced sheet (at cost): Branch: (108,000 x 100/120) ………………………….. P 90,000 HO: (P160-500 – P 10,500) …………………………….. 150,000 Inventory, 12/31/16 at cost ……………………………... P240,000 46. The home office of Irby Company bills merchandise to branches at 25% above home office cost. Information taken from the accounting records of Kipp Branch is as follows: Beginning inventories (at billed prices)…………………………. Shipments from home office (at billed prices)………………….. Ending inventories (at billed prices) ……………………………. Net loss for accounting period …………………………………..

17,000 42,500 20,000 1,500

The net income or net loss of Kipp Branch, based on home office cost of branch merchandise, is: a. P7,900 net income b. 9,400 net loss c. 6,400 net income d. 7,000 net income ANSWER: C. 6,400 net income Beg. Inventories ………………………………………. P17,000 Shipments from HO…………………………………… 42,500 Less: Ending Inventories………………………………. 20,000 39,500 X .20 7900 Less: Net loss for accounting period ……………….. 1500 6,400 47. Espana Branch was billed by home office for merchandise at 140% of cost. At the end of its first month, Espana branch submitted among other things the following data: Merchandise from HO @ billed price Merchandise purchased by branch Inevnotry, December 31 of which P7,000 are of local purchase Net sales for month

P98,000 40,000 28,000 180,000

The branch inventory at cost and the gross profit of the branch as far as the home office is concerned are: Gross Profit End. Inv. Of Branch at Cos A. 22,000 92,000 B. 92,000 22,000 C. 70,000 22,000 D. 90,000 20,000 ANSWER: B. P92, 000 Net Sales ………………………………………………… Less: COGS: Purchases …………………………………………. P 40,000 Shipments from home office, at cost (P98,000 x 100/140) ……………………………. 70,000 Cost of goods available for sale ………………… P110,000 Less: Inventory, December 31 [(P28,000 – P7000) x 100/140 + P7,000 ……….. 22,000 (b) Gross Profit ……………………………………………..

P180,000

88,000 P92,000 (b)

48. The manila branch of the Great 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 February 16 all of the branch merchandise is destroyed by fire. No insurance was maintained. Branch accounts show the following information: Merchandise inventory, Jan. 1 @ billed price Shipments from HO (Jan. 1 – Feb. 16) Sales Sales Returns Sales Allowances

26,400 20,000 15,000 2,000 1,000

ANSWER: D. P30,00 Merchandise Invenotry January 1, @ billed price …………………. P26, 400 Shipment from home office @ billed price ………………………… 20,000 Cost of goods available for sale @ billed price …………………….. P46,400 Less: COGS, @ billed price (P15,000 – P 2000) x 100/125 ……………………………… 10,400 Merchandise Inventory, Feb 16 @ billed price …………………… P36,000 Multiplied by cost ratio …………………………………………… 100/120 Merchandise Inventory destroys by fire, at cost ………………………… P30,000 (d) 49. The home office bills its Aklan branch at 15% of cost. During the year 2016, goods costing P300,000 were shipped to the branch. The account “allowance for overvaluation of branch inventory, after adjustment, shows a balance of P14,000 at the end of the year. Compute the amount of ending inventory at: Cost Billed Price A. 56,000 56,000 B. 300,000 375,00 C. 56,000 70,000 D. 70,000 56,000 ANSWER: C Allowance for overvaluation of branch inventory after adjustment* ..................................................................... Divided by Mark up on Cost ………………………………… Cost ………………………………………………………….. Add: Allowance for overvaluation of branch inventory * …… Billed Price ……………………………………………………

P14,000 25% P56, 000 (c) 14,000 P 70,000 (c)

50. Lobster Trading bills its Iloilo City branch for shipments of goods at 25% above cost. At the close business on October 31, 2016, a fire gutted the branch warehouse and destroyed 60% of the merchandise stock stored therein. Thereafter, the following data were gathere: Jan. 1 inventory @ billed price Shipment from HO to Oct 31 Not sales to Oct 31

P 50,000 130,000 225,000

If undamaged merchandise recovered are marked to sell for P30,000, the estimated cost of the merchandise destroyed by the fire was: A. P14,400 B. 21,600 C. 24,000 D. 27,500 ANSWER: B. P21,600 Inventory, January 1 @ billed price

P50,000

Add: Shipments from home office @ billed price

130,000

Cost of goods available for sale @ billed price.

= P180,00

Divided by: Cost of goods available for sale at sales price: Net Sales

P225,000

Add: Inventory before the fire: Undamaged merchandise Divided by: Recovery %

30,000 40%

75,000

= P 300,000

Percentage of Billing Price ton Selling Price

60%

*Since 60% of the inventory was destroyed by fire, therefore 40% was recovered. Eliminated of merchandise destroyed by fire: Inventory before the fire at selling price (P30,000 / 40%) Multiplied by: % of damaged merchandise Damaged merchandise of selling price

75,000 60% = P45,000

Multiplied by: % of Billing Price of Selling Price Damaged merchandise @ billed price Multiplied by: Cost Ratio COST OF MERCHANDJSE DESTROYED BY FIRE (b)

60% =P27,000 100/125 P21,600

SOURCES: A) PRACTICAL ACCOUNTING 2; VOLUME 2 - 2015 EDITION; ANTONIO J. DAYAG B) PRACTICAL ACCOUNTING 2; VOLUME 2 – 2013 EDITION; PEDRO P. GUERRRERO AND JOSE F. PERALTA