The following transactions pertain to a branchs first months operations:

1. The home office sent 11,250 cash to the branch.

2. The home office shipped inventory costing 50,000 to the branch; the intercompany billing was for 62,500.

3. Branch inventory purchase from outside vendors totaled 37,500.

4. Branch sales on account were 100,000.

5. The home office allocated 2,500 in advertising expenses to the branch.

6. Branch collections on accounts receivable were 56,250

7. Branch operating expenses of 17,500 were incurred, none of which were paid at month-end.

8. The branch remitted 21,250 to the home office.

9. The branch ending inventory (as reported in its balance sheet) is composed of:

Acquired from outside vendors 15,000

Acquired from home office (at billing price) 25,000

Total 40,000

Requirement:

I. Prepare the home office and branch journal entries for these transactions, assuming a periodic inventory system used.

II. Prepare the month-end closing entries for the branch.

III. Prepare the month-end adjusting entries for the home office relating to the branchs operations for the month.