Branch Accounting Profit and Loss Analysis
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AlexBranch Accounting Profit and Loss Analysis
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AlexProblem 4
On July 1, 2019, the home office in Manila establishes a branch in Quezon to act as a sales agency. The
following assets are sent to the sales agency on July 1:
Cash (for the working fund to be operated under the imprest system) P10,000
Samples from the merchandise stock 50,000
During July, the sales agency submits sales on account of P176,000 duly approved by the home office.
Cost of merchandise shipped to fill the orders from customers obtained by the sales agency is P105,000.
Home office disbursements chargeable to the sales agency are as follows:
Furniture and fixtures P24,000
Manager’s and salesmen’s salaries 17,500
Rent 8,000
On July 31, the sales agency working fund is replenished; paid expense vouchers submitted by the sales
agency amounting to P9,250. Sales agency samples are useful until December 31 which, at this time, are
believed to have a salvage value of 40% of cost. Furnitures are depreciated at 20% per annum.
The profit or (loss) of the sales agency during July 2019 is ___________________.
Problem 5
Shoppe Company started a branch in Iloilo City on June 1, 2020. On this date, the company shipped to
its branch merchandise billed at P90,000 and on June 15, another shipment was made at a billed price of
P36,000. During the same month, the branch was credited for P2,520 for damaged goods returned by
the branch. On June 30, the branch reported the following:
Inventory, June 30 50,400
Net loss for the month 7,800
Shipments to and from the branch were uniformly billed at 120% of cost.
Q1. The branch inventory on June 30 at cost is ___________________.
Q2. In the home office books, the branch operation resulted in net income (loss) of ________________.