Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Assume that you are the accountant of ABC Company. The companys home office is in Dubai and it has only one branch in Abu Dhabi.
Assume that you are the accountant of ABC Company. The companys home office is in Dubai and it has only one branch in Abu Dhabi. During 2017 the following transactions and events occurred.
Part A
- Home office transferred $100,000 cash, $500,000 inventory (billed at cost) and other assets costing $20,000 to Abu Dhabi branch.
- Abu Dhabi branch transferred to home office $20,000 cash and $10,000 inventory (recorded at cost).
- An equipment is purchased by the home office for the branchs usage for $80,000. Home office also pays $5000 for insurance for this asset which they allocated to branch. The home office keeps the accounting records for the equipment.
Instructions: Prepare journal entries for these transactions for both home office and branch.
Part B
- Prepare consolidated Income statement, Retained Earnings Statement and Balanced Sheet for ABC Company for the year ended December 31, 2018. You should use 4 column worksheets (Home office, Branch, Elimination and Combination). In the worksheet indicate the amounts as debit or credit.
You need to assume account titles and account balances needed to prepare the worksheets and the financial statements.
- Prepare home Office Adjusting and Closing Entries and Branch Closing Entries that should be done 31/12/2018
Part A and B are not related. They are independent questions.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started