LEARNING ACTIVITY 2: SPECIAL PROBLEMS ON HOME OFFICE AND BRANCH

The following was taken on from the records of a branch:

Sales by branch350,000

Billing to branch by home office312,500

Operating expenses50,000

Ending inventory at billed price125,000

The following information was taken from the records of home office:

Branch Current account325,000

Shipment to branch250,000

Allowance for markup-unadjusted62,500

Compute for the following:

1.Billing rate

2.Sales by branch to be included in combined financial statements

3.Realized mark up or RGP

4.Cost of goods sold to be included in the combined financial statements

5.Ending of inventory of branch to be included in the combined financial statements

6.Unrealized markup in ending inventory

7.Ending balance of allowance for markup before the combining of financial statements

8.Individual profit of branch

9.True profit of branch

10.Adjusted balance of the branch current account prior to combining of financial statements