Exercise 4.4

Acconang for Branches; Combesed Financil Stm t Chapter 4 On September 1, 2005, Pasadena Company established a branch in San Marino. Following are the first three transactions between the home office and San Marino branch of Pasadena. Company: cercise 4.2) Home office sent $10,000 to the branch for an imprest bank account. 2 Home office shipped merchandise costing S60,000 to the branch, billed at a markup of 20 % on billed price. Sept. 3 Branch acquired office equipment for $3,000, to be carried in the home office accounting records Both the home office and the San Marino branch of Pasadena Company use the perpetual inventory system Prepare journal entries (omit explanations) for the foregoing transactions: a. In the accounting records of the home office & In the accounting records of the San Marino branch. cercise4.3) On September 1, 2005, Western Company established the Eastern Branch. Separate ac- counting records were set up for the branch. Both the home office and the Eastern Branch use the periodic inventory system. Among the intracompany transactions were the following: Sept. Home office mailed a check for $50,000 to the branch. The check was received by the branch on September 3. 4 Home office shipped merchandise costing $95,000 to the branch at a billed price of $125,000. The branch received the merchandise on September 8. 1The branch acquired a truck for $34,200. The home office maintains the plant assets of the branch in its accounting records Prepare journal entries (omit explanations) for the foregoing intracompany transacticns in the accounting records of (a) the home office and (b) the Eastern Branch cercise 4.4) Among the journal entries of the home office of Watt Corporation for the month of January 2005, were the following: 2005 100,000 Jan. 2 Investment in Wishire Branch 80,000 Inventories Alowance for Ovenrvaluation of imventories Wishire Branch 20,000 To record merchandise shipped to branch. 18 Equipment: Wishire Branch 5,000 ivestment in Wlshire Branch 5,000 To record acqusition of equipment by branch for cash 8,000 31 Investment in Wishire Branch 8.000 operating Expenses To record alocation of operating expenses to branch Prepare related jounal entries for the Whilshire Branch of Watt Corporation: the branch uses the perpetual inventory system Acconsng for Pwnes and Branches 148 Part One Among the journal entries for business transactions and events of the Hoover Stre of Usc Company during January 2005, were the following (Exercise 4.5) CHECK FIGURE Jan 10, Credit allowance for overvaluation of 2005 Jan 12 nventories 60000 Home Office imventories, $12,000. To record the seceipt of merchandise shipped Jan. 10 from the home office and biled et a markup of 20% on biled price. 25,000 25 Cash Home Office To record collection of trade accounts receivable of home office. 18.000 31 Operating Expenses Home Office