8-8. You are engaged to audit the records of the Western Import Company, which has not...

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8-8. You are engaged to audit the records of the Western Import Company, which has not previously been audited. The trial balance at December 31, 19X3, fol- lows: Home Debits Office Branch Cash... 15,000 2,000 Accounts Receivable. 20,000 17,000 Inventory December 31, 19X3 30,000 8,000 Plant Assets (net) 150,000 Branch...... 44,000 Cost of Goods Sold... 220,000 93,000 Expenses.. Total 70,000 41,000 549,000 161,000 Credits Accounts Payable 23,000 Mortgage Payable 50,000 Capital Stock... 100,000 Retained Earnings - January 1, 19X3. 26,000 Sales...... 350,000 150,000 Accrued Expenses 2,000 Home Office.... 9,000 549,000 161,000 Total..... The following additional information is to be considered: (a) The branch receives all of its merchandise from the home office. The home office bills goods to the branch at 125% of cost. During 19X3 the branch was billed for $105,000 on shipments from the home office. (b) The home office credits Sales for the invoice price of goods shipped to the branch. (c) On January 1, 19X3, the inventory of the home office was $25,000. The branch books showed a $6,000 inventory. (d) On December 30, 19X3, the home office billed the branch for $12,000, representing the branch's share of expenses paid at the home office. The branch has not recorded this billing. 8-8. You are engaged to audit the records of the Western Import Company, which has not previously been audited. The trial balance at December 31, 19X3, fol- lows: Home Debits Office Branch Cash... 15,000 2,000 Accounts Receivable. 20,000 17,000 Inventory December 31, 19X3 30,000 8,000 Plant Assets (net) 150,000 Branch...... 44,000 Cost of Goods Sold... 220,000 93,000 Expenses.. Total 70,000 41,000 549,000 161,000 Credits Accounts Payable 23,000 Mortgage Payable 50,000 Capital Stock... 100,000 Retained Earnings - January 1, 19X3. 26,000 Sales...... 350,000 150,000 Accrued Expenses 2,000 Home Office.... 9,000 549,000 161,000 Total..... The following additional information is to be considered: (a) The branch receives all of its merchandise from the home office. The home office bills goods to the branch at 125% of cost. During 19X3 the branch was billed for $105,000 on shipments from the home office. (b) The home office credits Sales for the invoice price of goods shipped to the branch. (c) On January 1, 19X3, the inventory of the home office was $25,000. The branch books showed a $6,000 inventory. (d) On December 30, 19X3, the home office billed the branch for $12,000, representing the branch's share of expenses paid at the home office. The branch has not recorded this billing.