A- On December 31, 2019, the unadjusted credit balance of the Allowance for Overvaluation of Inventories: Hope Branch ledger account in the accounting records of the home office of Farah Company was $60,000. The home office of Farah ships merchandise to the branch at a markup of 20% on billed price. For the fiscal year ended December 31, 2019, the branch had reported a net loss (based on billed prices of merchandise shipped from home office) of $18,400 and ending inventories (all received from home office) of $132,000 at billed prices.

Required:

Prepare journal entries for the home office of Farah Company on December 31, 2019, to record the foregoing information. (9 marks)

B- The following ledger account was in the accounting records of the Habiba Branch of ABC Company on December 31, 2019:

Home Office
Date	Explanation	Debit	Credit	Balance
2019
Jan. 1	Balance			40,000 cr
Mar. 10	Cash remitted to home office	10,000		30,000 cr
31	Merchandise returned to home office	2,650		27,350 cr
June 6	Merchandise received from home office		14,400	41,750 cr
Oct. 10	Cash received from home office		2,600	44,350 cr
Dec. 20	Acquisition of fixtures	9,250		35,100 cr
31	Net income		7,770	42,870 cr

The home office of ABC Company used the perpetual inventory system, and billed the branch for merchandise shipments at 20% above home office cost.

Required:

Prepare journal entries to record the above indicated transactions and events in the accounting records of the home office of ABC Company. (14 Marks)

C- A review of Sara Company, a U.S. corporation, shows the following balances in accounts receivable detail at December 31, 2019, their fiscal year end.

Receivables denominated in U.S. dollar $852,000. Receivable denominated in 80,000 Australian dollar $86,000, and Receivable denominated in 140,000 Canadian dollar $143,500

As Sara prepared to close their books, they noted that the December 31 exchange rates for the Australian dollar, Canadian dollar and Hong Kong dollar were $1.0366, $1.0391 and $0.1284, respectively.

Required:

1- Determine the exchange gain or loss to be included in the 2019 financial statements

2- Determine the amount of Accounts Receivable that will be included on the December 31, 2019 balance sheet. (4 Marks)

D- The reciprocal ledger account balances of Youssef Companys branch and home office are not in agreement at year-end. What factors might have caused this? Give examples.