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Advanced Accounting - Part 2 Problem 8 Branch Income Statement Branch Reported Net Income

1) The document contains income statements for a branch, home office, and combined statement. 2) The branch reported net income of $78,500 but the true net income is $8,000 after adjusting for realized profit allowed by the home office. 3) The home office reported net income of $6,500 from its own operations and $8,000 from the branch for total net income of $14,500.

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45 views4 pages

Advanced Accounting - Part 2 Problem 8 Branch Income Statement Branch Reported Net Income

1) The document contains income statements for a branch, home office, and combined statement. 2) The branch reported net income of $78,500 but the true net income is $8,000 after adjusting for realized profit allowed by the home office. 3) The home office reported net income of $6,500 from its own operations and $8,000 from the branch for total net income of $14,500.

Uploaded by

Airille
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd

Advanced Accounting - Part 2

Chapter 13
Problem 8
Branch Income Statement
Branch
Reported Net
Income
Sales
Less: Cost of Sales
Merchandise Inventory - beg
Home office
Outsider
Total
Add: Goods delivered during the period
Shipment from Home Office
Purchases
Total goods delivered
Goods available for sale
Less: Merchandise Inventory - end
Home office
Outsider
Total
Cost of goods sold
Gross profit
Less: Operating expenses
Result from operation

78,500
Billed
24,500
7,500
32,000
40,000
20,000
60,000
92,000
26,000
5,500
31,500
60,500
18,000
12500
5,500

8,000
Home office Income Statement
Sales
Less: Cost of Sales
Merchandise Inventory - beg
Add: Purchases
Goods available for sale
Less: Merchandise Inventory - end
Shipment to branch
Gross profit
Less: Operating expenses
Net income from own operation
Add: Branch true net income
Net income

55,000
30,000

Combined Income Statement


Sales
Less: Cost of sales, at cost
Merchandise Inventory - beg
Add: Purchases
Total cost of goods available for sale
Less: Merchandise Inventory - end
Gross profit
Less: Operating expenses
Net income

Branch True
Net income
78,500
Cost

Realized profit

Allowance

20,000
7,500
27,500

4,500
4,500

30,000
20,000
50,000
77,500

10,000

19,500.00
5,500
25,000
52,500
26,000
12500
13,500

8,000

10,000
14,500
6,500
6,500
8,000

Difference realized profit

256,000
80,000
210,000
290,000
85,000

205,000
51,000
60,000
(9,000)
13,500
4,500

334,500
107,500
230,000
337,500
80,000

257,500
77,000
72,500
4,500

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