1)MLB Inc
Subject:AccountingPrice: Bought3
1)MLB Inc. is a merchandiser of baseballs. All purchases and sales of MLB are on account. The following information was obtained from the company's accounting records for the year ended December 31, 2020:
Inventory at December 31, 2020
(based on physical count in MLB's warehouse at cost on December 30, 2020) P12,000,000
Net Purchases 13,000,000
Accounts Payable 11,000,000
Net Sales 15,000,000
Accounts Receivable 14,000,000
Net Income 12,500,000
The following data were found during your audit:
a. Goods were in transit costing P100,000 from a supplier on December 30, 2020 with shipping term of FOB Destination. Further testing revealed that the purchase had been recorded on December 31, 2020 because the invoice was sent on such date.
b. Goods were in transit with selling price of P200,000 to a customer on December 29, 2020 with shipping term of FOB Destination. The goods arrived to customer on January 1, 2021. The sale is recorded by MLB on December 31, 2020. (The mark-up is 20% based on sale)
c. Goods costing P50,000 was held on consignment on December 30, 2020 and included in the physical inventory count. MLB recorded this transaction as a purchase on December 31, 2020.
d. Goods were in transit costing P150,000 from a supplier on December 29, 2020 with shipping term FOB Shipping point. The goods arrived to MLB on December 31, 2020. The purchase was recorded by MLB on January 2, 2021 when the invoice arrived.
e. Goods in were transit with selling price of P240,000 to a customer on January 1, 2021. The goods arrived to the customer on January 2, 2021. The shipping term is FOB Shipping Point. The sale was recorded by MLB on December 31, 2020 when the sales invoice was sent to the customer. (The mark-up is 20% based on sale)
f. Goods costing P250,000 was out on consignment with a customer on December 30, 2020. This is recorded as sales on account for P300,000.
g. Goods costing P150,000 on December 30, 2020 was found to be defective. They are included in the physical inventory count and expected to be returned on December 31, 2020.
h. Goods were in transit costing P400,000 from a supplier on December 31, 2020 with shipping term FOB Shipping Point. Further testing revealed that the purchase had been recorded on December 31, 2020 because the invoice was sent on such date.
i. Good were in transit with selling price of P100,000 to a customer on December 31, 2020. The goods were shipped on December 31, 2020 with shipping term of FOB shipping point. (The mark-up is 30% based on sale). The sale is recorded by MLB on January 1, 2021 when the invoice was sent to the customer.
j. MLB received goods costing P200,000 on December 31, 2020. The shipping term is FOB-destination and MLB recorded the purchase on January 1, 2021 when the invoice was received.
k. Goods were shipped to a customer on December 29, 2020 with selling price of P200,000. The shipping term is FOB-destination and the goods arrived to the customer on January 1, 2021. The sale was recorded by MLB on December 31, 2020. (The mark-up is 30% based on sale)
l. Goods costing P150,000 were shipped on January 1, 2021 from a supplier. The goods were received by MLB on January 2, 2021 and the shipping term is FOB Shipping Point. The purchase was recorded by MLB on December 31, 2020 when the invoice was received.
m. Goods costing P300,000 were shipped on December 28, 2020 from a supplier. The goods were received by MLB on January 1, 2021 with shipping term FOB shipping point. The purchase was recorded by MLB on December 31, 2020 when the invoice was received.
n. Goods costing P240,000 were shipped on December 28, 2020 to a customer. The goods were received by the customer on January 1, 2021 with shipping term FOB destination. The sale was recorded by MLB on December 31, 2020 when the invoice was sent. (The mark-up is 20% based on sale)
Required: Based on the result of your audit, determine the adjusted balance of the following as of December 31, 2020:
I. Accounts Receivable
II. Accounts Payable
III. Net Purchases
IV. Net Sales
V. Inventory
VI. Net Income
2. The following transactions pertain to a branch's first month's 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 branch's operations for the month.
3. On December 31, the Investment in Branch account on the home office books shows a balance of 150,000. The following facts are ascertained:
1. Merchandise billed at 5,000 is in transit on December 31, from the home office to the branch.
2. The branch collected a home office account receivable for 2,000. The branch did not notify the home office of cash collection.
3. On December 30, the home office mailed a check of 10,000 to the branch but the bookkeeper charged the check as a general expense. The branch has not received the check as of December 31.
4. Branch profit for December was recorded by the home office at 8,900 instead of 9,800.
5. Branch returned supplies of 1,000 to the home office but the home office has not yet recorded the receipt of the supplies.
Required:
I. Compute the balance of the Home Office account on the branch books as of December 31 before its adjustment
II. Prepare the reconciliation statement to compute the adjusted balance on December 31
