Reference no: EM132593121

Manila Company has a branch in Baguio and Davao. The reciprocal accounts between the home office and the branches were in agreement at the beginning of 2020. However at December 31, 2020, the following reciprocal balances are found in the home office books:

Investment in Baguio P186,500

Investment in Davao 84,000

Data for reconciliation of the reciprocal accounts are as follows:

• On December 29, 2020, the home office has instructed Baguio to transfer P74,000 cash to Davao. Baguio recorded this transaction immediately. Upon receipt, Davao has recorded this transfer at P47,000. The home office however has not yet recorded this interbranch transaction as of end of the year.

• Manila has transferred goods costing P28,900 to Baguio branch and paid P2,500 of shipping cost on December 16, 2020. Baguio shipped all of these goods to Davao upon instruction of the home office on December 30, 2020. Shipping cost is P3,600 freight collect. Had the goods were shipped directly to the Davao, P5,000 of freight cost should have been incurred. The interbranch shipment was not recorded by the branches and the home office as well.

• Baguio has collected cash of P5,750 from Davao's customer. This transaction is not yet recorded by Davao and the home office.

• The home office has already allocated P11,000 and P9,000 of administrative expenses to Baguio and Davao respectively. The branches are not yet notified.

• Baguio remitted P14,300 cash to the home office on December 12, 2020. The home office has failed to record the said remittance.

• Davao returned goods costing P6,850 to the home office. The goods were shipped on December 19 and received on December 24 but no entries have been made in the home office books.

Question 1: Compute for the following:

1. Excess freight on interbranch transfer of inventories
2. Adjusted balance of Investment in Baguio account
3. Adjusted balance of Investment in Davao account
4. Unadjusted balance of Home Office Current account in Baguio's books
5. Unadjusted balance of Home Office Current account in Davao's books