(a) Closing entries on the branch books. (b) Balance-sheet of branch after closing. (c) Statement converting branch trial balance and December 31, 1919, inventory to the dollar values at which the various items should appear in the closing entries which will be made to take up the branch profit on the home-office books and in the branch balance-sheet consolidated with the home-office balance-sheet. (d) Branch profit-and-loss statement for the year, from facts shown on the branch books, shown in pounds sterling and in dollars. (e) Journal entries on the home-office books taking up the branch profit shown in the statement required in (d). (f) Journal entries closing the home-office books, allowing $1,000.00 depreciation on the factory buildings and $500.00 depreciation on the furniture and fixtures of the branch. (g) Statement of the London branch current account on the homeoffice books. (h) Branch balance-sheet in pounds sterling and dollars, showing dollar balance of home-office current account in agreement with branch current account balance in (g). (i) Working papers consolidating the branch and home-office balancesheets. (j) When the average rate is not known or is not to be used for nominal account conversions, the various conversions are made as follows: Fixed assets at the rate current at the time of purchase. Current assets and liabilities at current rate. Opening inventory at rate at beginning of period. Shipments from home office at balance of shipments account on homeoffice books. Nominal accounts at current rate. Prepare the following assuming that the average rate is not known: Journal entry on home-office books taking up net profit shown by branch books. Journal entry adjusting the branch current account and reserve for exchange. (k) Assume that the home office does not keep a reserve for exchange, but absorbs the adjustment in the branch profit and loss account-show how the last entry under (j) would be made in that case, and draw up the branch profit and loss account as it would appear on the homeoffice books. (b) 21,000 21,000 60,000 60,000 EASTERN & WESTERN MANUFACTURING Co., LONDON BRANCH Balance-Sheet-December 31, 1919 Inventory, December 31, 1919, £5,000 @ 4.665 = $23,325,00 (d) EASTERN & WESTERN MANUFACTURING Co., LONDON BRANCH (e) Journal entries on home-office books taking up branch net profit. Reserve for dep'n, London furniture and fixtures To provide one year's depreciation 500.00 To put present inventory on books, crediting selling account therewith, and closing sales to selling account Reserve for exchange fluctuations Entry to raise current account balance representing net assets at branch to net conversion values. 1,625.00 Remittances from London branch London branch-current account To close remittance account to current account .279,000.00 279,000.00 (g) Statement of London Branch Current Account Balance, January 1, 1919 .. ... 249,750.00 Add branch profit for the year as shown by branch books, but before providing depreciation on furniture and fixtures...... 97,765.00 Add charge to current account and credit to reserve to reconcile current account with branch balance-sheet at conversion values 1,625.00 Balance, December 31, 1919 (h) EASTERN & Western Manufacturing Co., LONDON BRANCH Balance-Sheet-December 31, 1919 70,140.00 (i) EASTERN & WESTERN MANUFACTURING COMPANY Consolidated Balance-Sheet Working Papers-December 31, 1919 |