Reference no: EM132593114

CG Trading Co. operates a branch in Cebu City. At close of the business on December 31, 2020, the Home Office account in the books of the Cebu branch showed a credit balance of P420,000.

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. Freight charge of P3,200 on merchandise shipped to the branch was paid by the home office and was recorded in the branch books as P2,300.

b. A branch debit memo for P6,900 was recorded twice by the home office.

c. The branch failed to take up a P4,000 credit memo from the home office.

d. Branch store insurance premiums of P3,200 were paid by the home office. The home office debited Insurance expense and credited Cash in its books. The branch was not notified.

e. A P35,000 shipment, charged by home office to Cebu branch, was actually sent to and

retained by Cabanatuan branch.

f. The home office allocated advertising and rent expense totaling P6,000 to Cebu branch. The home office charged the said expense to Caloocan branch by mistake, Cebu branch had not entered the allocation at year-end.

g. A branch customer remitted P21,000 to the home office. The home office recorded the said transaction as a collection from its own customer. The branch was not notified.

Question 1: The unadjusted balance of the Investment in Branch account on December 31, 2020 and the adjusted balance of the reciprocal accounts (include your solution)