Reference no: EM132792662

The Home Office had two branches, Mandalagan and Manalangin. At the end of the year, December 31, 2020, the reciprocal account in Mandalagan Branch was P256, 600. However, there were transactions discovered to have errors.

• The home office shipped merchandise costing P87,000 to Mandalagan branch, but was recorded by the branch in the amount of P78,000.
• Mandalagan collected Manalangin's customer account worth P25,000, but Manalangin charged its reciprocal account in the amount of P52,000 and the home office recorded the correct transaction.
• The Mandalagan branch bought P56,500 worth of equipment with useful life 4 years on June 1, 2020, for use of the home office and it was the policy of the company that the equipment will be recorded by the branch, but Mandalagan recorded it as P56,050. It was indicated also in the policy that the straight line method of depreciation will be used.
• The home office and Mandalagan branch did not record any depreciation for the said equipment.

Problem 1. What is the unadjusted balance of the Investment in Mandalagan account?

Problem 2. What is the net adjustment in the Home Office Current account?

Problem 3. What is the adjustment balance of the reciprocal accounts?