5. On April 1 of the current year, the Domestic Company establishes an organization to act as a sales agency. The following assets are sent to the agency on April 1: A working fund to be operated under the imprest P1,000 system 5,000 Samples from the merchandise stock Advertising materials and literature 1,250 During April the agency submits sales on account of P17,600 that are approved by the home office; cost of merchandise shipped in filling orders is P10,500. Home office disbursements chargeable to the agency are as follows: Furniture and fixtures for agency Salaries and commissions P2,400 1,750 800 Rent PRACTICAL 2, Branches and Agencies Page 5 On April 30 the agency working fund is replenished. Paid expense vouchers submitted by the agency are as follows: Advertising expense Miscellaneous expense P 325 600 The following information is used in adjusting the agency accounts on April 30: . Agency samples will be useful until December 31; at that time it is believed they will have a salvage value of 40% of cost. Approximately 2/5 of the advertising materials and literature remain on hand. Furniture and fixtures are to be depreciated on a 5-year basis. . . The agency manager is to receive a bonus of 5% of all sales above P10,000 a month, the bonus to be paid by the home office at quarterly intervals. Required: 1. Prepare the journal entries on the home office books to record the transactions and to adjust and close the accounts kept with the agency. 2. Prepare a statement summarizing agency activities for April.