8-7. The trial balances of the home office and the branch office of The Allen Company appear as follows: The Allen Company Trial Balance December 31, 19x7 Debits Home Branch Cash... 17,000 200 Inventory Home Office. 23,000 Inventory Branch 11,550 Sundry Assets. 200,000 48,450 Branch 60,000 Purchases.... 190,000 Shipments from Home Office 105,000 Freight in from Home Office.. 5,500 Sundry Expenses...... 42,000 24,300 532,000 195,000 Credits Sundry Liabilities.. 35,000 3,500 Home Office..... 51,500 Sales...... 155,000 140,000 Shipments to Branch 110,000 Unrealized Intercompany Inventory Profit. 1,000 Capital Stock........ 200,000 Retained Earnings. 31,000 532,000 195,000 The audit at December 31, 19X7, disclosed the following: (1) The branch office deposits all cash receipts in a local bank for the ac- count of the home office. The audit working papers for the cash cutoff revealed: Amount Deposited by Branch Recorded by Home Office $1,050 December 27, 19X7 December 30, 19X7 1,100 December 29, 19X7 January 2, 19X8 600 December 30, 19X7 300 January 2, 19X8 January January 3, 19X8 6, 19X8 (2) The branch office pays locally incurred expenses from an imprest bank account that is maintained with a balance of $2,000. Checks are drawn once a week on this imprest account and the home office is notified of the amount needed to replenish the account. At December 30 an $1,800 reimbursement check was mailed to the branch office. (3) The branch office receives all of its goods from the home office. The home office bills the goods at cost plus a markup of 10% of cost. On December 31 a shipment with a billing value of $5,000 was in transit to the branch. Freight costs are typically 5% of billed values. Freight costs are considered to be inventoriable costs.