Question

combined The unadjusted trial balances of Areen Co. and its branch at 31/12/2019: accounts JERICO BRANCH Elimination sales -390000 -220000 inventories 1/1 120000 84,000 purchases 180000 shipment to A shipments from 150000 inventories 31/12 -90000 -36000 operating expenses 230000 30000 gain or losses B TOTAL beginning retained earning -290000 net income dividend 20000 ending retained statement of financial position cash 104000 148000 inventories 31/12/2019 90000 36000 investment in branch allowance for valuation of inventories -39000 other assets 305000 current liabilities -45000 - 12000 ordinary shares -250000 home office -180000 retained earning | total

Required:

1- Fined the missing amount if the company shipment the goods at 20% above cost to branch.

2. Complete the working paper for combined financial statements.

Answer 1

Answer :

Accounts	Jerico	Branch	Ellimination	Combined
Sales	$(390,000)	$(220,000)	-	$(610,000)
Inventories 1/1	$120,000	$84,000	-	$204,000
Purchases	$180,000	-	-	$180,000
Shipment to	$(125,000)	-	-	$(125,000)
Shipment from	-	$150,000	-	$150,000
Inventories 31/12	$(90,000)	$(36,000)	$6,000.0	$(120,000)
Operating expense	$230,000	$30,000		$260,000
Gain or Loss	$(75,000)	$8,000	-	$(61,000)
Beginning retained earning	$(290,000)	-	-	$(290,000)
Net income	$(75,000)	$8,000	-	$(61,000)
Dividend	$20,000	$-	-	$20,000
Ending Retained Earning	$(345,000)	$8,000	-	$(331,000)

Statement of financial position

Cash	$104,000	$148,000	-	$252,000
Inventories 31/12	$90,000	$36,000	$(6,000.0)	$120,000
Investment in branch	$180,000	-	-180000	$-
Allowance for valuation of	-	-	-	-
Inventories	$(39,000)	-	-	$(39,000)
Other Assets	$305,000	-	-	$305,000
Current liabilities	$945,000)	$(12,000)	-	$(57,000)
Ordinary shares	$(250,000)	-	-	$(250,000)
Home Office	-	$(180,000)	180000	$-
Retained earning	$(345,000)	$8,000	-	$(331,000)

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