Reference no: EM133029324

Question 1 - During the past year, the following transactions took place between the home office and branchof the Klein Company:

1. Cash of Br.25,000 was transferred to the branch.

2. Merchandise costing Br.60,000 was shipped to the branch at a billed price of Br.86,000. The branch paid the freight-in of Br.1,500.

3. Home office expenses charged to the branch: depreciation, Br.4,000; amortization of prepaid expenses, Br.800.

4. Cash of Br.60,000 was remitted to the home office.

Required - Prepare journal entries to record the following transactions in the books of both the home office and the branch.

Question 2 - Millennium Company's home office bills shipments of merchandise to its Meskel Branch at 140% of home office cost. During the first year after the branch was opened, the following were among the transactions and events completed:

1. The home office shipped merchandise with a home office cost of Br110,000 to Meskel Branch.

2. Meskel Branch sold for Br80,000 cash merchandise that was billed by the home office at Br70,000, and incurred operating expenses of Br16,500 (all paid in cash).

3. The physical inventories taken by Meskel Branch at the end of the first year were Br 82,460 as billed prices from the home office.

Required - Assuming that the perpetual inventory system is used both by the home office and by Meskel Branch, prepare for the fiscal year: All journal entries, including closing entries, in the accounting records of Meskel Branch of Millennium Company.