Reference no: EM132608062
Question - Springfield Clothing operates a branch in BGC. At close of the business on December 31, 2018, the capital account in the books of the BGC branch showed a normal balance of P2,784,300. The interoffice accounts were in agreement at the beginning of the year. For purposes of reconciling the interoffice accounts, the following facts were ascertained:
a. On December 27, 2018, the BGC branch released a check for P13,500 to Fabric Warehouse Trading. The branch inadvertently recorded the transaction as a remittance to Springfield Clothing and sent a copy of the memo to notify the home office. Springfield recorded this upon receiving the said memo on January 2, 2019.
b. Springfield Clothing allocated promotions and advertising expense totalling P18,000 to BGC branch. The home office erroneously charged the said expense to Eastwood branch. BGC branch was not yet informed of the said allocation as of year-end.
c. A memo from Springfield Clothing for P20,700 regarding transfer of funds was recorded twice by the BGC branch by debiting its interoffice account.
d. Coat and Ties, a BGC branch customer remitted P15,000 to Springfield Clothing. The home office recorded this as cash collection of its own receivable on December 28, 2018. Upon notification the following day, the branch debited the amount to Receivable from Home Office and credited its reciprocal account.
e. A P105,000 shipment, charged by home office to BGC branch was actually sent to and retained by Rockwell branch.
f. The home office failed to take up a P12,000 credit memo from the branch.
g. BGC branch store insurance premiums of P9,600 were paid by Springfield. The home office debited Insurance expense and credited Cash in its books. The branch recorded the amount of P96,000 as a liability.
h. Merchandise costing P39,000 was sent to the BGC branch by Springfield on December 12, 2018. The branch recognized a liability crediting Accounts Payable upon the receipt of the inventory.
i. Freight charge of P12,600 on merchandise shipped to BGC branch was paid by Springfield and was recorded in the branch books at P1,260.
j. Elite Designs, a BGC branch customer remitted P63,000 to Springfield. The home office recorded this cash collection on December 23, 2018. Upon receiving a notification, the BGC branch recorded the transaction twice on December 27, 2018.
Required - Find the unadjusted balance of the Investment in BGC branch account as of December 31, 2018?