Answered step by step
Verified Expert Solution
Link Copied!

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

  1. Home office transferred $100,000 cash, $500,000 inventory (billed at cost) and other assets costing $20,000 to Abu Dhabi branch.
  2. Abu Dhabi branch transferred to home office $20,000 cash and $10,000 inventory (recorded at cost).
  3. 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

  1. 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.

  1. 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

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Karen Bird, Gene Imhoff

3rd Edition

0984200541, 9780984200542

More Books

Students also viewed these Accounting questions