Branches
25. The trial balance of Jones & Smith, Chicago branch, shows December 31, 1918, the following:
| Home Office | $2,000.00 | |
| Due from Customers | $2,500.00 | |
| Cash on Hand | 1,000.00 | |
| Expenses | 1,900.00 | |
| Merchandise | 3,400.00 | |
| $5,400.00 | $5,400.00 |
Inventory $1,000.
Draft the necessary journal entries to close the accounts on the branch books, and the entries to be made in the home office to make the books agree.
26. A branch office business was started at the first of the year, the head office advancing $5,000 cash. During the first year merchandise was shipped to branch, invoiced at $75,000.
An auditor checking up the business at the close of the year finds the following: Merchandise sales were $60,000, with selling price of goods 20% advance on invoice. Proper vouchers were on file duly receipted for following payments: rebates and allowances on damaged goods $1,500; salaries and other expenses $4,500; freights $2,500.
The books also showed: remittances to head office $35,000; uncollected accounts $15,000. The balance of the sales having been realized in cash, less rebates and allowances as noted.
The cash on hand and inventory of unsold goods, together with the foregoing records, properly accounts for everything.
Prepare statement, such as an auditor would make in reporting to the head office, balancing the business of the branch house.
27. The condition of the Atlantic Co. at the close of business December 31, 1918, is reported by them as follows:
| Assets | Liabilities | ||
| Real Estate | $150,000.00 | Capital Stock | $500,000.00 |
| Machinery | 200,000.00 | Mortgage on Real Estate | 100,000.00 |
| Cash | 24,500.40 | Accounts Payable | 67,000.00 |
| Accounts Receivable | 320,800.50 | Notes Payable | 100,000.00 |
| Merchandise | 375,480.70 | ||
| Surplus | 200,000.00 | ||
| Profit and Loss | 103,781.60 | ||
| $1,070,781.60 | $1,070,781.60 | ||
The company has a branch to which it sells its goods at 20% over inventory prices and carries this account, together with other branch assets, as a receivable. The statement of the branch on the same date was:
| Assets | Liabilities | ||
| Fixtures | $6,205.79 | Atlantic Co. | $25,033.43 |
| Cash | 1,107.55 | ||
| Accounts Receivable | 12,478.14 | ||
| Merchandise at price billed to Branch | 5,241.95 | ||
| $25,033.43 | $25,033.43 | ||
(a) What was the inventoried value of the branch merchandise?
(b) Prepare a corrected statement of the Atlantic Co.