ncluded an Allowance for Overvaluation of Inventories: Southwest Branch ledger account with a credit balance of $32,000. During March, the following transactions occurred: On March 4, the home office shipped merchandise costing $66,000 to the Southwest Branch and billed it at a price representing a 40% markup on the billed price. On March 8, the branch sold 70% of the merchandise received from the home office on march 4 for $90,000 cash. On March 15, the branch sold 20% of the merchandise received from the home office on march 4 to Hope company for $30,000 on credit. On March 22, the home office info
ncluded an Allowance for Overvaluation of Inventories: Southwest Branch ledger account with a credit balance of $32,000. During March, the following transactions occurred: On March 4, the home office shipped merchandise costing $66,000 to the Southwest Branch and billed it at a price representing a 40% markup on the billed price. On March 8, the branch sold 70% of the merchandise received from the home office on march 4 for $90,000 cash. On March 15, the branch sold 20% of the merchandise received from the home office on march 4 to Hope company for $30,000 on credit. On March 22, the home office info
Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter5: Accounting Systems
Section: Chapter Questions
Problem 14E: Guardian Services Inc. had the following transactions during the month of April: a. Record the June...
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Habiba Company has a single branch in Southwest. On March 1, 2020, the home office accounting records included an Allowance for Overvaluation of Inventories: Southwest Branch ledger account with a credit balance of $32,000. During March, the following transactions occurred:
- On March 4, the home office shipped merchandise costing $66,000 to the Southwest Branch and billed it at a price representing a 40% markup on the billed price.
- On March 8, the branch sold 70% of the merchandise received from the home office on march 4 for $90,000 cash.
- On March 15, the branch sold 20% of the merchandise received from the home office on march 4 to Hope company for $30,000 on credit.
- On March 22, the home office informed the branch that it had collected 50% of the amount owed by Hope company.
- On March 28, the branch paid operating expenses of $10,000 cash.
- On March 29, Hope company paid the remaining amount due to Southwest branch,
- On March 30, the home office allocated operating expenses of $4,000 to the branch.
Required:
- Prepare a working paper for the home office to analyze the flow of merchandise to Southwest branch during March 2020.
- Prepare all required entries, including closing and
adjusting entries , for the foregoing intracompany transactions in the accounting records of (a) the home office and (b) the Southwest Branch. - Reconstruct a three-column ledger account Allowance for overvaluation of inventories: Southwest branch for the home office of Habiba Company.
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