HOBA - Finals Quiz
HOBA - Finals Quiz
Home office ships to the branch inventory costing 100,000 and bills the branch 120% of the cost.
Home Office Books Branch Books
Investment in branch 120,000 Shipments from HO
Shipments to branch 100,000 Home office
Allowance for markup 20,000
Sales 500,000
Cost of Sales:
Inventory, beg. -
Shipments from home office, @COST (456k/120%) 380,000
Freight in (10k+6k+2k) 18,000
Purchases 40,000
Total Goods available for sale 438,000
Inventory,end., @COST (240k/120%)+10k) 210,000 228,000
Individual gross profit of branch 272,000
Operating expenses 100,000
True profit of branch 172,000
Alternative Solution
Add the realized mark-up to the individual profit. The realized mark-up is the mark-up on the shipments that were sold to exte
Note: Notice that the true profit is computed simply by restating the merchandise received from the H.O to their original cost
120,000
120,000
240,000
10,000
250,000
96,000
6,000
96,000
6,000
ght of 2,000.
40,000
2,000
40,000
2,000
500,000
500,000
100,000
20,000
80,000
89922.48
When combined financial statements are prepared, the allowance account is eliminated together with the “shipments” accou
in order to remove the mark-up and restate the branch’s cost of goods sold and ending inventory to their original costs.
Sales (1.6M+500K)
Cost of Sales
Inventory, Beg.
Purchases (1.2M+40K)
The trial balances of SINOVAC Corp. and its two branches, Alpha and Delta as of December 31, 2020 are presented below.
Additional information:
1. Ending inventories excluding the goods in transit (for branches) are P32,000. P8,400 and P4,800 for the Home Office, Alpha
2. Cash of P2,000 was sent by the home office to Alpha and is yet to be received by Alpha as at December 31, 2020.
Cash sent in the amount of P4,000 by Delta to home office is yet to be received by the home office as at December 31, 2020.
3. Unrealized profit account represents allowance for overvaluation in beginning inventories of Alpha and Delta.
Required:
The adjusted balance of Home Office Current that will appear on the individual financial statements of Alpha Branch is
The adjusted balance of Home Office Current that will appear on the individual financial statements of Delta Branch is
The mark-up rate based on cost is _____% 20
Individual profit of Alpha Branch is 16200
Individual profit of Delta Branch is 2400
Realized profit as an adjustment by the home office in computing the true net income of Alpha Branch is
Realized profit as an adjustment by the home office in computing the true net income of Delta Branch is
Correct net income - Alpha Branch is 21000
Correct net income - Delta Branch is 7000
Adjusted balance of unrealized profit-branch inventories at December 31, 2020 is
Cost of sales that must appear on the published financial statements of SINOVAC Corp. at December 31, 2020
How much is the shipments in transit that Alpha Branch failed to record? 6000
How much is the shipments in transit that Delta Branch failed to record? 3000
Ending inventory at cost of Alpha Branch is 12000
Ending inventory at cost of Delta Branch 6500
The ending inventory of SINOVAC Corp. at December 31, 2020 is 50500
Adjusted cash balance of home office is 22000
Adjusted cash balance of Alpha Branch is 7000
Adjusted cash balance of Delta Branch is 15000
How much is the beginning inventory of SINOVAC Corp.? 46500
, 2020 are presented below.
a Branch is 4800
a Branch is 4600
3700
ember 31, 2020 116000
On December 7,2020, the home office of HOBA Company recorded a shipment of merchandise to its Tarlac Branch as follows:
The Tarlac branch sells 40% of the merchandise to outside entities during the month of December 2020.
On January 2,2021, Tarlac branch transfers half of the original shipment to Aurora branch and Tarlac branch pays 500 as shipm
The freight cost of the merchandise from the home office to Aurora branch would have been 600.
Required:
The entry on the books of Tarlac Branch to record the transfer on January 2, 2021 would include a debit to home office curren
The entry on the books of Aurora Branch to record the transfer on January 2, 2021 would include a credit to home office curre
The ending inventory of Tarlac Branch to be reported in its individual balance sheet as of December 31, 2020 is:
The ending inventory of Tarlac Branch to be reported in the published balance sheet of HOBA Company as of December 31, 20
The realized profit to adjust the individual net income of Tarlac Branch is: 1600
se to its Tarlac Branch as follows: