HOB Problems

The Pampanga branch of Saruman Enterprises was billed for merchandise shipments from
home office at cost plus 25% in 2015 and cost plus 20% in 2016. Other pertinent data for Inventory, January 1, 2016 (at billed price) P 257,400
2016 shows the following: Shipments received from home office, January to July 171,600
Pampanga Home Office Purchases, at cost, from outside sources, all resold at 20% markup 11,700
branch Sales 234,000
Sales 78,120 262,880 Sales allowance 6,500
Inventory beginning 11,036 28,520
Purchases 203,360 6. How much is the estimated loss on the merchandise destroyed by the fire at cost?
Inventory transfers to Pampanga 52,080
Inventory transfers from Home Office 62,496 JM Co. operates a branch in Davao. There are shipments in transit from home office of the
Inventory ending 14,508 35,340 branch. The home office ships merchandise to the branch at 125% of cost in the year 2016.
Expenses 25,172 94,736 Profit and loss data for the home office and branch for 2016 follows:
Home Office Branch
1. How much is the reported net income (loss) of the branch? Sales 410,000 123,000
2. How much is the combined net income of Saruman Enterprise? Purchase from outsiders 328,000 24,600
Shipments to Branch:
During 2016 goods were shipped to a branch at 20% above cost. The reciprocal account in Cost to Home Office 49,200
the income statement of the branch amounted to P414,000. The balance of the contra Billing Price to Branch 53,300
investment in branch account reports a balance of P90,000 before adjustment. The beginning Expenses 65,600 16,400
inventory of the branch is P150,000 and including inventory purchased from outsider Inventories, January 1, 2016
amounting P45,000. The branch purchased goods from outsiders during the year amounting Home Office: acquired from outsiders, at cost 131,200
to P136,800. The ending inventory of the branch as reported in the combined statement of Branch: acquired from outsiders, at cost 7,500
financial position is P480,000, 25% of which are purchased from outside suppliers. Acquired from Home Office at billing price
which averaged 20% above cost 12,300
3. How much is the cost of goods sold to be reported in the branchs income Inventories, December 31, 2016
statement for the year ended December 31, 2016? Home Office: acquired from outsiders, at cost 90,200
4. How much is the adjusted balance of allowance for mark-up for the year ended Branch: acquired from outsiders, at cost 9,020
December 31, 2016? Acquired from Home Office, in 2016, at billed
price (physical count) 34,440
The Quezon City Sales Company established a branch in Dumaguete City early last year. It At the end of the year the home office has an investment in branch balance amounting to
shipped merchandise and billed the branch for P240,000 prior to its opening. For the year, it P361,000 before recognizing branch profit.
made additional shipments at billed price of P96,000. Within the year, the branch shipped
back P6,000 inventory and got the credit memo for said returns. On the last working day of 7. How much is the combined cost of goods sold?
the year, an inventory count was made. Ending inventory of P148,000 was established 8. How much is the combined net income(loss)?
consisting of purchases from third parties at P16,000, with the balance coming from home 9. How much is the combined ending inventory?
office shipments at billed price. The home office billed the branch at 20% above cost. The 10. How much is the investment in branch account after recognizing branch profit?
total purchases of the branch from outside suppliers amounted to P58,000.
5. The total goods available for sale by the branch at cost amounted to?
The Best Co. bills merchandise shipments in its Cavite City branch at 125% of cost. The
branch, in turn, sells the merchandise it receives from the home office at 25% above the
billing price. On August 1, 2016, all of the branchs merchandise stock was destroyed by fire
except for some goods marked to sell for P46,800. The branch records that were recovered
showed the following:

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The Pampanga branch of Saruman Enterprises was billed for merchandise shipments from

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