UNIT IV | unit 4 accounting for inland branches

UNIT IV

Accounting for Inland Branches

Q1) Suri is having his Head office at Mumbai and Branch Office at Nasik. Prepare the branch Account in the books of the Head Office from the following transaction with the branch:

PARTICULARS	AMOUNT	PARTICULARS	AMOUNT
Opening Balance at Branch:		Amounts remitted to the Branch for :
- Petty Cash	1,000	- Petty Cash Expenses	4,000
- Stock	39,500	- Salary	12,000
- Debtors	21,000	- Rent and Taxes	3,500
Goods Supplied to Branch during the year	3,10,000	Closing balances ay Branch:
Amounts remitted by the branch		- Petty	950
- Cash Sales	1,13,200	- Debtors	53,000
- Realisation from Debtors	2,30,300	- Stock	26,500

A1)

IN THE BOOKS OF H.O.

Dr. NASIK BRANCH ACCOUNT. Cr.

PARTICULARS	AMOUNT	PARTICULARS	AMOUNT
To Balance b/d		By Bank (Remittance):
Branch petty cash	1,000	- Petty Cash Expenses	4,000
Branch Stock	39,500	- Salary	12,000
Branch Debtors	21,000	- Rent and Taxes	3,500
To Goods sent to Branch	3,10,000	Closing balance at Branch
To cash remitted for:		- Petty Cash	950
Petty Cash Expenses	4,000	- Debtors	53,000
Salary	12,000	- Stock	26,500
Rent	3,500
To General P&L (Bal Fig)	32,950
TOTAL	4,23,950	TOTAL	4,23,950

Q2) D of Delhi have a branch at Madras. Goods are sent by the Head Office at Invoice Price which is at the Profit of 25% on Cost Price. All the Expenses of the branch are paid by the Head Office. From the following particulars, prepare Branch Account in Head Office Books

BALANCES	OPENING	CLOSING
Stock at invoice	11,000	13,000
Debtors	1,700	2,000
Petty Cash	100	25
TOTAL	12,800	15,025

Goods sent to branch at invoice price Rs. 20,000.

Expenses made by head office: -Rent Rs.600, Wages Rs.200, Salaries Rs.900

Remittance made to Head Office: - Cash Sales Rs. 2,650, Cash collected from debtors Rs. 21,000

Goods Returned by Branch at Invoice Price Rs.400

A2)

IN THE BOOKS OF HEAD OFFICE

Dr. MADRAS BRANCH A/c. Cr.

PARTICULARS	AMOUNT	AMOUNT	PARTICULARS	AMOUNT	AMOUNT
To Balance b/d			By Stock Reserve A/c b/d(Load on OP. Stock 11,000 X 25/125)		2,200
Stock (IP)		11,000	By Bank
Debtors		1,700	Cash Sales	2,650
Petty Cash		100	Cash collected from Debtors	21,000	23,650
To Goods sent to Branch (IP)		20,000	By Goods sent to branch (Returns at IP)		400
To Bank (Expenses):			By Goods sent to branch (19,600 X 25/125; net Loading)		3,920
Rent	600		By Balance c/d
Wages	200		Stock (IP)	13,000
Salaries	900	1,700	Debtors	2,000
To Stock Reserve A/c c/d(Load on Cl. Stock 13,000 X 25/125)		2,600	Petty Cash	25	15,025
To Net Profit tfd to general P&L (Bal Fig)		8,095
TOTAL		45,195	TOTAL		45,195

Note: Goods are sent by Head Office at @ 25% on Cost Price.

So, Cost + Profit = Invoice Price

100 + 25 = 125

Profit charged by Head Office is 1/5 or 20% of Invoice Price.

Q3) One M.P. Head Office has a branch at Berhampur to which goods are invoiced at cost plus 20% .from the following particulars prepare the Branch Account in the Head Office Books :

PARTICULARS	AMOUNT
Goods sent to Branch at invoice Price	2,11,872
Total Sales	2,06,400
Cash Sales	1,10,400
Cash received from Branch Debtors	88,000
Branch Debtors at commencement	24,000
Branch Stock at commencement at Invoice price	7,680
Branch Stock at Close of the period at Invoice Price	13,440

A3)

IN THE BOOKS OF M.P. HEAD OFFICE

Dr. BERHAMPUR BRANCH ACCOUNT. Cr.

PARTICULARS	AMOUNT	AMOUNT	PARTICULARS	AMOUNT	AMOUNT
To Balance b/d			By Stock Reserve A/c b/d(Load on OP. Stock)		1,280
Stock (IP)		7,680	By Bank
Debtors		24,000	Cash Sales	1,10,400
To Goods sent to Branch (IP)		2,11,872	Cash collected from Debtors	88,000	1,98,400
To Stock Reserve A/c c/d(Load on Cl. Stock)		2,240	By Goods sent to branch (2,11,872 X 20/120; net Loading)		35,312
To Net Profit tfd to general P&L (Bal Fig)		34,640	By Balance c/d
			Stock (IP)	13,440
			Debtors	32,000	45,440



TOTAL		2,80,432	TOTAL		2,80,432

Working Note:

Dr. BERHAMPUR BRANCH DEBTORS ACCOUNT. Cr.

PARTICULARS	AMOUNT	PARTICULARS	AMOUNT
To Balance b/d	24,000	By Cash	88,000
To Credit Sales	96,000	By balance c/d (balancing figure)	32,000
TOTAL	1,20,000	TOTAL	1,20,000

(2)

Total Sales =2,06,400

Less: - Cash Sales =1,10,400

Credit Sales =96,000

(3)

Goods are sent by Head Office at @ 20% on Cost Price.

So, Cost + Profit = Invoice Price

100 + 20 = 120

Profit charged by Head Office is 1/6 of Invoice Price.

Q4) The Canada commercial company invoiced goods to its Jaipur Branch at cost. The head office paid all the branch expenses from its bank except petty cash expenses which were Paid by the branch. From the following details relating to the branch, prepare

(1): Branch Stock A/c

(2)Branch Debtors A/c

(3)Branch Expenses A/c

(4)Branch P&L A/c

PARTICULARS	AMOUNT	PARTICULARS	AMOUNT
Stock (Opening)	21,000	Discount to Customer	4,200
Debtors (Opening)	37,800	Bad Debts	1,800
Petty Cash(Opening)	600	Goods returned by customers to branch	1,500
Goods sent to H.O.	78,000	Salaries	18,600
Goods returned to H.O.	3,000	Rent	3,600
Cash Sales	52,500	Debtors(Closing)	29,400
Advertisement	2,400	Petty Cash (Closing)	300
Cash received from debtors	85,500	Credit Sales	85,200
Stock(Closing)	19,500
Allowances to Customer	600

A4)

Dr. BRANCH STOCK A/c. Cr.

PARTICULARS	AMOUNT	PARTICULARS	AMOUNT
To Balance b/d	21,000	By Branch Cash	52,500
To Goods sent to sent Branch	78,000	By Goods sent to Branch	3,000
To Branch Debtors	1,500	By Branch Debtors	85,200
To Branch P&L (Transfer)	59,700	By Balance c/d	19,500
TOTAL	1,60,200	TOTAL	1,60,200

Dr. BRANCH DEBTORS A/c. Cr.

PARTICULARS	AMOUNT	PARTICULARS	AMOUNT
To Balance b/d	37,800	By Branch Cash	85,500
To Branch Stock (Credit Sales)	85,200	By Branch expenses Bad Debts 1,800 Allowances 600 Discount 4,200	6,600
		By Branch Stock (Returns)	1,500
		By Balance c/d	29,400
TOTAL	1,23,000	TOTAL	1,23,000

Dr. BRANCH EXPENSES A/c. Cr.

PARTICULARS	AMOUNT	PARTICULARS	AMOUNT
To Branch Debtors	6,600	By Branch P&L	31,500
To Bank Advertisement 2,400 Salaries 18,600 Rent 3,600	24,600
To Petty Expenses (600-300)	300

TOTAL	31,500	TOTAL	31,500

Dr. BRANCH PROFIT & LOSS A/c. Cr.

PARTICULARS	AMOUNT	PARTICULARS	AMOUNT
To Branch Expenses	31,500	By Branch Stock	59,700
To General P&L (Bal Fig)	28,200
TOTAL	59,700	TOTAL	59,700

Q5) The following are the details of ‘Indore Branch’ for the year 2018

PARTICULARS	AMOUNT	PARTICULARS	AMOUNT
Opening stock	6,000	Salaries	2,000
Opening Petty Cash	500	Rent	1,500
Opening Debtors	8,000	Closing Stock	8,000
Goods sent to Branch	24,000	Cash sent to Branch	2,200
Goods returned by Branch	800	Discount Allowed	100
Remittance from Branch	33,500	Bad Debts	150
Returns from Debtors	2,000	Commission Paid	750
Collection from Debtors	34,000	Closing Petty Cash	450
Cash Sales	1,500	Closing Debtors	9,000

Prepare: (1) Branch Stock A/c (2) Branch Debtors A/c (3) Branch Expenses A/c

(4) Branch P&L A/c (5) Branch Cash (6) Goods sent to Branch A/c

A5)

Dr. BRANCH STOCK A/c. Cr.

PARTICULARS	AMOUNT	PARTICULARS	AMOUNT
To Balance b/d	6,000	By Branch Cash (Cash Sales)	1,500
To Goods sent to sent Branch	24,000	By Goods sent to Branch	800
To Branch Debtors(Return Inwards)	2,000	By Branch Debtors(Credit Sales)	37,250
To Branch P&L (Transfer)	15,550	By Balance c/d	8,000
TOTAL	47,550	TOTAL	47,550

Dr. BRANCH DEBTORS A/c. Cr.

PARTICULARS	AMOUNT	PARTICULARS	AMOUNT
To Balance b/d	8,000	By Branch Cash (Received from Debtors)	34,000
To Branch Stock (Credit Sales) (Bal Fig)	37,250	Branch expenses Bad Debts 150 Discount 100	250
		By Branch Stock (Returns)	2,000
		By Balance c/d	9,000
TOTAL	45,250	TOTAL	45,250

Dr. BRANCH CASH A/c. Cr.

PARTICULARS	AMOUNT	PARTICULARS	AMOUNT
To Balance (Petty Cash)	500	By Branch Expenses Salaries 2,000 Rent 1,500 Commission 750	4,250
To Bank (Remittance)	2,200	By Bank (Remittance from Branch)	33,500
To Branch stock (Cash Sales)	1,500	By Balance (Petty Cash)	450
To Branch Debtors (Received)	34,000

TOTAL	38,200	TOTAL	38,200

Dr. BRANCH EXPENSES A/c. Cr.

PARTICULARS	AMOUNT	PARTICULARS	AMOUNT
To Branch Debtors	6,600	By Branch P&L	31,500
To Bank Advertisement 2,400 Salaries 18,600 Rent 3,600	24,600
To Petty Expenses (600-300)	300

TOTAL	31,500	TOTAL	31,500

Dr. BRANCH EXPENSES A/c. Cr.

PARTICULARS	AMOUNT	PARTICULARS	AMOUNT
To Branch Debtors	250	By Branch P&L (Balance Transferred)	4,500
To Branch Cash	4,250


TOTAL	4,500	TOTAL	4,500

Dr. GOODS SENT TO BRANCH A/c. Cr.

PARTICULARS	AMOUNT	PARTICULARS	AMOUNT
To Branch Stock	800	By Branch Stock	24,000
To Purchase	23,200


TOTAL	24,000	TOTAL	24,000

Dr. BRANCH PROFIT & LOSS A/c. Cr.

PARTICULARS	AMOUNT	PARTICULARS	AMOUNT
To Branch Expenses	4,500	By Branch Stock (Gross Profit)	15,550
To General P&L (Bal Fig)	11,050
TOTAL	15,550	TOTAL	15,550

Q6) Mumbai Textile Mills Ltd. Has branch at Agra. Goods are invoiced to branch at cost plus 50%. Branch remits all cash received to the head office and all expenses are met by head office. From the following particulars, prepare the necessary accounts under the Stock and Debtors system to Show the Profit Earned at the Branch:

PARTICULARS	AMOUNT
Stock on the 1st April,2013 (Invoice Price)	93,000
Debtors on 1st April,2013	68,000
Goods Invoiced to Branch (Cost)	3,40,000
Sales at Branch:
Cash	2,50,100
Credit	3,10,000
Cash Collected from Debtors	3,04,000
Goods Returned by Debtors	12,000
Goods Returned by Branch to head office	1,500
Shortage of Stock	4,500
Discount Allowed to Customer	2,000
Expenses at Branch	54,000

A6)

Dr. BRANCH STOCK A/c. Cr.

PARTICULARS	AMOUNT	PARTICULARS	AMOUNT
To Balance b/d	93,000	By Branch Cash (Cash Sales)	2,50,100
To Goods sent to sent Branch (3,40,000 X 150%)	5,10,000	By Branch Debtors(Credit Sales)	3,10,000
To Branch Debtors	12,000	By Goods sent to Branch	1,500
		By Branch Adjustment (Shortage)	4,500
		By Balance c/d	48,900
TOTAL	6,15,000	TOTAL	6,15,000

Dr. BRANCH ADJUSTMENT A/c. Cr.

PARTICULARS	AMOUNT	PARTICULARS	AMOUNT
To Branch Stock(Shortage)	4,500	By Stock Reserve(Loading on Opening Stock)	31,000
To Goods Sent to Branch	500	By Goods Sent to Branch	1,70,000
To Gross Profit c/d	1,79,700
To Stock Reserve(Loading on Closing Stock)	16,300
TOTAL	2,01,000	TOTAL	2,01,000

Dr. BRANCH PROFIT & LOSS A/c. Cr.

PARTICULARS	AMOUNT	PARTICULARS	AMOUNT
To Branch Expenses	54,000	By Branch Stock (Gross Profit)	1,79,700
To Discount	2,000
To General P&L (Bal Fig)	1,23,700
TOTAL	1,79,700	TOTAL	1,79,700

Dr. GOODS SENT TO BRANCH A/c. Cr.

PARTICULARS	AMOUNT	PARTICULARS	AMOUNT
To Branch Stock	1,500	By Branch Stock	5,10,000
To Branch Adjustment	1,70,000	By Branch Adjustment	500
To Trading A/c(Bal Fig)	3,39,000

TOTAL	5,10,500	TOTAL	5,10,500

Dr. BRANCH DEBTORS A/c. Cr.

PARTICULARS	AMOUNT	PARTICULARS	AMOUNT
To Balance b/d	68,000	By Branch Cash (Received from Debtors)	3,04,000
		By Branch expenses (Discount)	2,000
To Branch Stock (Credit Sales)	3,10,000	By Branch Stock (Returns)	12,000
		By Balance c/d	60,000
TOTAL	3,78,000	TOTAL	3,78,000

Dr. BRANCH CASH A/c. Cr.

PARTICULARS	AMOUNT	PARTICULARS	AMOUNT
To Sales	2,50,100	By Head Office Cash	5,54,100
To Debtors	3,04,000	(Sent to HO)
TOTAL	5,54,100	TOTAL	5,54,100

Q7) A Ltd. Has a branch in Calcutta. Goods are invoiced at cost plus 25%.
Opening Balance	2002
Stock	3,200
Debtors	1,300
Goods sent to Branch (Invoice price)	75,000
Sales at Calcutta
Cash Sales	32,000
Credit Sales	38,000
Cash collected from Debtors	33,400
Discount allowed	400
Bad Debts written off	250
Cash sent to Branch for expenses	5,500
Stock at end	7,900

A7)

BRANCH STOCK A/C
To Balance b/d	3,200	To Cash Sales	32,000
To Goods Sent to Branch A/c		By Branch Debtors	38,000
	75,000	By Branch Adjustment A/c	300
		By Balance c/d	7,900
	78,200		78,200
GOODS SENT TO BRANCH A/C
To br. Adjustment A/c (loading)	15,000	By Br. Stock A/c	75,000
To Trading A/c (Transfer)	60,000
	75,000		75,000

BRANCH STOCK RESERVE A/C

To Br. Adjustment A/c			640	By Balance b/d		640
To balance c/d			1,580	By Branch Adj. A/c		1,580
			2,220			2,220
BRANCH DEBTORS A/C
To Balance b/d			1,300	By Cash		33,400
To Branch Stock (Cr. Sales)			38,000	By Branch Exp. A/c
				Discount	400
				Bad Debts	250	650
				By Bal. c/d		5,250
			39,300			39,300
BRANCH ADJUSTMENT A/C
To Branch Stock Reserve
(closing stock) A/c			1,580	By Stock Reserve (opening stock)		640
To br. Stock A/c (shortage)			300
To Br. Exp. A/c			7,150	By Goods sent to br. A/c		15,000
To P & L A/c			6,610
			15,640			15,640
BRANCH EXPENSES A/C
To Cash			6,500	By Branch Adjustment A/c		7,150
To branch Dr.s A/c
	Discount	400
	Bad Debts	250	650
			7,150			7,150

Q8) P.O. Ltd. Calcutta, started a branch in Bombay on 1st April, 1983 to which goods were sent at 20% above cost. The branch does not maintain double entry books of account and necessary accounts relating to branch are maintained in H.O. Following further details are given for year ended on 31st March, 1984

Cost of goods sent to Branch	50,000
Goods received by Branch till 31st March, 1984 at invoice price	54,000
Credit sales for the year	58,000
Debtors as on 31st March, 1984	20,800
Bed Debts and Discount written off	200
Cash remitted to H. O.	43,000
Cash in hand at Branch on 31st March, 1984	2,000
Cash remitted by H.O. To Branch during the year	3,000
Closing stock at Branch (at invoice price)	6,000
Expenses incurred at Branch	12,000

Determine the Profit or Loss of the Branch for the year ended on 31st March, 1984, according to Stock and Debtors system in the books of the Head Office

A8) Branch Stock A/c

Particulars		Particulars
To GST Branch A/c	60,000	By Branch Debtors A/c	58,000
To Branch Adj A/c (b/f) (sales above invoice	27,000	By Branch cash a/c	17,000
Price)		By balance c/d(60,000-54,000)	6,000
		By stock in hand	6,000
	870000		87000

Branch Debtors A/c

Particulars

To b/d

To Branch Stock A/c

58,000

By Branch (B. Debts & dis)

By Branch cash A/c b/f By balance c/d

200

37,000

20,800

58000

Branch Adjustment A/c

Particulars

To Stock reserve (clos)

To G.P. Transfer to Branch P/L

2000

35,000

By Branch Stock A/c

By Goods sent to Branch

27,000

10,000

37,000

37000

Branch P/L A/c

Particulars

To Branch cash a/c (exp)

To Branch bad debts

Net profit transfer to General P/L

12,000

200

22,800

By G.P.

35,000

Branch Cash A/c

Particulars		Particulars
To b/d	Xx	By Cash A/c (remitted)	43,000
To Branch Debtors A/c	37,000	By Branch expenses	12,000
To H.O Cash A/c	3,000	By Bal. c/d	2000
To Branch Stock A/c (Cash sales (b/f)	17,000
	57,000		57,000

Goods sent to Branch A/c

Particulars

To Shop stock (100%)

To Branch Adjusted A/c 20%

50,000

10,000

By Branch Stock A/c (120%)

60,000

Q9) Dreams Unlimited opened a Branch at Delhi on 1st April, 200I. The goods were sent by the Head Office to the Branch and invoiced at selling price of the Branch which was 125% of the cost price of the head office.

The following are the particulars relating to the transactions of Delhi Branch: Goods sent to branch (at cost to Head Office) Sales:	2,80,000
Cash	1,25,000
Credit	1,75,000
Cash collected from Debtors	1,56,000
Discounts allowed	4,000
Returns from Debtors	5,000
Cash sent to branch for:
Wages 3,000
Freight 11,000
Other Expenses 6,000	20,000
Spoiled cloth in bales written off at invoice price	500
Closing Stock	55,500

Ascertain the profit or loss for the Delhi Branch for the year ended 31st March, 2002 after preparing Branch Stock Account and Branch Debtors Account.

A9) Delhi Branch Stock Account

Particulars		Particulars
To Goods Sent to Branch A/c	3,50,000	By Branch Debtors A/c	1,25,000
To Branch Debtors A/c –– Returns To Branch Adjustment A/c (Surplus)	5,000 1,000	By Branch Cash A/c (Cash Sales By Branch Adjustment A/c By Branch Profit & Loss Ac	1,75,000 100
		(Cost of spoiled cloth)	400
		By Balance c/d	55,500
	3,56,000		3,56,000

Dr. Delhi Branch Debtors Account Cr.

Particulars		Particulars
To Branch Stock A/c (Cr. Sales)	1,75,000	By Cash A/c	1,56,000
		By Discounts A/c	4,000
		By Branch Stock A/c (Returns)	5,000
		By Balance c/f	10,000
	1,75,000		1,75,000

Dr. Delhi Branch Adjustment Account Cr.

Particulars		Particulars
To Branch Stock A/c-Loading To Wages (treated as Direct) To Freight (treated as Direct) To Closing Stock Reserve A/c 55,500  25     125  To Gross Profit transferred -to Branch P and L A/c	100	By Goods sent to Branch A/c [ 3,50,000 x 25/125] By Branch Stock A/c (above invoice Price)	70,000
	3,000
	11,000		1,000
	11,100
	45,800
	71,000		71,000

Dr. Delhi Branch Profit & Loss Account Cr.

Particulars		Particulars
To Expenses	6,000	By Branch Adjustment A/c (Gross Profit)	45,800
To Discounts	4,000
To Branch Stock A/c
[Cost of Spoiled cloth]	400
To P and L A/c (Net Profit)	35,400
	45,800		45,800

Branch Cash A/c

Particulars		Particulars
To Branch stock To Branch debtor To Cash A/c (sent by H.O.) - Wages - Freight - Other expense	1,25,000	By Cash A/c (sent to H.O.) By expense - Wages - Freight - Other expense
	1,56,000		2,81,000
			3,000
	3,000		11,000
	11,000		6,000
	6,000
	3,01,000		3,01,000

Q10) Bombay traders Ltd. Sends goods to its madras Branch at cost plus 25 percent. The following particulars are available in respect of the branch for the year ended 31st March 1988.

Opening stock at branch at cost to branch(I.P of H.O)	80,000
Goods sent to branch at invoice price	12,00,000
Loss in transit at invoice price	15,000
Pilferage at invoice price	6,000
Sales	12,19,000
Expenses	60,000
Closing stock at branch at cost to branch	40,000
Recovered from insurance company against loss in transit Show ledger Accounts in the head office books for:	10,000

(a) Branch stock account (c) Goods sent to branch account

(b) Branch adjustment account (d) Branch profit and loss account

A10) Branch Stock

Particulars		Particulars
To Balance b/d	80,000	By loss in transit	15,000
To GST B A/c	12,00,000	By pilferage	6,000
		By sales	12,19,000
		By balance c/d	40,000
	12,80,000		12,80,000

Branch Adjustment A/c

Particulars		Particulars
To loss in transit	3,000	By Stock reserve (op)	16,000
To pilferage	1,200	By GSTB A/c	2,40,000
To Stock Reserve (clos)	8,000
To Branch P/L A/c	2,43,800
	25,6000		25,6000

Goods sent to Branch

Particulars

To Branch Adj. A/c

To Purchase (b/f)

2,40,000

9,60,000

By Branch stock A/c

12,00,000

Branch P/L A/c


To loss in transit	12,000	By Branch Adj A/c
To pilferage	4,800	By Ins claim	10,000
To Exp	60,000	By Adj A/c	2,43,8000
To Profit	1,77,000
	2,53,800		2,53,800

Q11) Martin & Co. Is a retail organisation with a number of branch shops. All accounts are kept at the head office, and goods sent to branches are recorded at cost plus the expected mark up of 33 1/3 percent. The accounting system is designed to give the head office as much control as possible over the branch stocks.

At the Calcutta branch at 1st April 1995, goods costing 1,200 in stock, but some of these costing 150, Had been reduced in selling price to 160. The balances of the Calcutta debtors accounts totaled 920 at the same date.

The following information relates to the Calcutta branch for the year to 31st March, 1996 at the end of that year:

Goods sent to branch (cost) 18,600

Cash sales (including all the goods marked down at the beginning of the year

And others costing 1,800 sold for half of the normal selling price) 16,060

Cash received from debtors 6,280

Goods returned by branch debtor direct to head office (selling price) 80

Bad debts written off 30

Closing stock of goods at selling price 2,400

Closing total of debtor’s balances 830

You are required to prepare the relevant accounts for the Calculate branch, and calculate the branch profit for the year.

A11) Dr. (i) Goods Sent to Branch Account Cr.

Particulars

To Branch Adjustment A/c(Loading on

Goods sent)

To Shop stock A/c To Br. Debtor A/c

6,200

18,600

By Branch Stock

By Branch Adjustment By Shop Stock A/c

80  100

133.33%

24,800

24,880

Dr. (ii) Branch Stock Account Cr.

Particulars

To balance b/d 1,200

400

(40)

To Goods sent to Branch A/c.

(18,600+6,200)

1,560

24,800

By Cash (Cash sales)

By Branch Debtors (Credit sales) By Branch Adjustment

By Branch P/L A/c

By Abnormal loss (B. f.) By Balance c/d

16,060

6,300

600

400

2,400

26,360

Dr. (iii) Branch Debtors Account Cr.

Particulars

To Balance b/d

To Branch Stock A/c (Credit sales Bal. Fig.)

920

6,300

By Cash

By Bad Debts

By Goods Sent to Br. A/c (Sales Returns)

By Balance c/d.

6,280

830

7,220

Dr. (iv) Branch Profit and Loss Account Cr.

Particulars

To Bad Debts

To Abnormal loss (Cost of Loss) (400-100) To Branch Stock (Loss)

To Net profit transfer to General P/L A/c

300

600

4,310

By Gross Profit b/d

5,240

5,640

5,240

Dr. (v) Branch Adjustment Account Cr.

Particulars		Particulars
To Branch Stock A/c	600	By Branch Stock Reserve	360
(Markdown on sales at loss)		(Loading on opening stock)	6,200
To Goods Sent to Branch A/c	20	By Goods sent to Branch A/c
(Loading on Returns)
To Branch Stock Reserve	600
(Loading on closing stock)
To Shortage of Stock (Loading on shortage)	100
To Gross profit b/d	5,240
	6,560		6,560

Dr. (vi) Shortage of Stock Account Cr.

Particulars

To Branch stock A/c

400

By Branch Adjustment A/c

(Loading)

By Branch P/L A/c (Cost)

100

300

400

Working Note:

(i) Cost = 1,800

+ Mark up 1/3 = 600

Normal S.P 2,400

Actual S.P. = ½ × 2,400 = 1,200

Discount 1,200

Profit (Loading) 600

Cost

600

Bal. Fig.

Branch P/L A/c

Q12) Sumana Ltd. Invoices goods to its various branches at cost and the branches sell for cash as well as on credit. From the following particulars, prepare the necessary ledger accounts in the books of head office:

Particulars		Particulars
Stock, 1st January	10,000	Allowance to customers	400
Stock, 31st December	8,000	Bad debts	600
Debtors, 1st January	14,000	Returns from Customers	1,000
Debtors, 31 December	15,000	Remittance by Branch	46,000
Cash, 1st January	400	Wages and Salaries	4,000

Goods sent to Branch	30,000	Rent and Taxes	2,000
Goods returned by Branch	2,000	Normal loss of goods due to wastage	500
Cash Sales	30,000	Abnormal loss due to pilferage	1,500
Credit Sales	25,000	Cash remitted to Branch	4,500

A12) Branch A/c

Particulars		Particulars
To Balance b/d		By Goods sent to Br. By cash A/c (To H.O.) By Balance c/d - Stock - Debtor - Cash A/c (W/N)	2,000
- Stock	10,000		46,000
- Debtor	14,000
- Cash	400
To goods sent to Branch	30,000		8,000
To Cash A/c	4,500		15,000
To net Profit	17,000		4,900
	75,900		75,900

Branch Cash A/c

Particulars

To Balance b/d

To Branch Stock To cash A/c

To Branch Deb.

400

30,000

4,500

22,000

By cash A/c

By wages and salary By Rent & tax

By Balance c/d

46,000

4,000

2,000

4,900

56,900

Branch Debtor A/c

Particulars		Particulars
To Balance b/d	14,000	By Discount	400
To Mom. Branch stock	25,000	By bad debt	600
		By Br. Stock	1,000
		By Cash A/c	22,000
		By Balance c/d	15,000
	39,000		39,000

Branch Stock A/c

Particulars		Particulars
To Balance b/d	10,000	By Branch Cash A/c	30,000
To Branch debtor	1,000	By Br. Debtor	25,000
To goods sent to Br.	30,000	By Good Sent to Br.	2,000
To wages	4,000	By Abnormal loss	1,500
To gross/profit	21,500	By Balance c/d	8,000
	41,000		66,500

Branch P/L A/c

Particulars		Particulars
To Rent & tax	2,000	By Gross Profit	21,500
To Abnormal loss	1,500
To Bad debts	600
To allowance	400
To net Profit	17,000
	21,500		21,500

Q13) Give Journal Entries in the books of Branch A to rectify or adjust the following:

(i) Head Office expenses 3,500 allocated to the Branch, but not recorded in the Branch Books

(i) Depreciation of branch assets, whose accounts are kept by the Head Office not provided for 1,500.

(ii) Branch paid 2,000 as salary to a H.O. Inspector, but the amount paid has been debited by the Branch to Salaries account.

(iii) Head Office collected 10,000 directly from a customer on behalf of the Branch, but no intimation to this effect has been received by the Branch.

(iv) A remittance of 15,000 sent by the Branch has not yet been received by the Head Office.

Branch A incurred advertisement expenses of 3,000 on behalf of Branch B.

A13) In the books of branch, A Journal Entries

Date	Particulars
(i)	Expenses A/c Dr. To Head office A/c (Being H.O. Expenses allocated to branch)	3,500	3,500
(ii)	Depreciation A/c Dr. To Head Office A/c (Being the depreciation charged)	1,500	1,500
(iii)	Head office A/c Dr. To Salaries A/c (Being the rectification of salary A/c, which is paid on behalf of H.O.)	2,000	2,000
(iv)	Head office A/c Dr. To Debtors A/c (Being adjustment of Amount, collected from branch debtors)	10,000	10,000
(v)	Cash in transit A/c Dr. To H.O. A/c	-	-
(vi)	Head Office A/c Dr. To Cash A/c (Being the advertisement expenditure incurred by Branch A of Branch B.)	3,000	3,000

Q14) From the following information, prepare Delhi Branch Account in the books, of head office for the year ending on 31st March 2001

Particulars

Opening Stock (at cost)

Opening Debtors Opening Petty Cash

Furniture (in the beginning) Opening Creditors

Goods sent to Branch (at Cost) Goods returned by Branch to

H.O (at cost)

Goods returned by Customers to Branch

Cash received by Branch from, its customers

1,78,000

14,000

250

6,000

5,22,000

7,800

5,700

6,11,000

Discount allowed to Customers

Bad Debts written off Credit sales

Cash Sales

Petty Expenses paid by Branch Cheques sent to Branch for expenses:

Salaries

Rent and Insurance Petty Cash

500

1,000

7,29,400

32,000

8,000

30,000

12,000

7,870

Goods are sold to customers at cost price + 50%. Depreciate the furniture @ 10% p.a.

A14) Dr. Delhi Branch Account in the books of H.O. Cr.

Particulars		Particulars
To Balance b/d:		By Balance b/d: creditors By Cash Sales 32,000 Collection from debtors 6,11,000 Less: Pay to Creditors (6,000) By Goods sent to Branch A/c (return by branch) By Balance c/d: Stock Debtors Petty Cash Furniture ( 6,000 - 600)	6,000
Stock	1,78,000
Debtors	14,000
			6,37,000
Petty Cash	250
Furniture	6,000		7,800
To Goods sent to Branch A/c	5,22,000
To Bank A/c (Remittance to Branch)			1,88,400
Salaries 30,000			1,25,200
Rent and Insurance 12,000			120
Petty Cash 7,870	49,870		5,400
To Net Profit t/f to General P & L A/c	1,99,800
	9,75,920		9,75,920

Working Notes (i)

Memorandum Branch Stock A/c

Particulars	Amount	Particulars	Amount
To B/d	178000	By Credit Sales	729400
To Goods Sent to Branch	522000	By Cash Sales	32000
		Less: Return from customer	(5700)
To Gross Profit		By Goods Returned by Branch	7800
(755700 × 50/150)	251900	By Closing stock (b/f)	188400
	971900		971900

(ii) Dr. Memorandum Branch Debtors Account Cr.

Particulars		Particulars
To Balance b/d	14,000	By Returns to Branch	5,700
To Credit Sales	7,29,400	By Discount allowed	500
		By Bad Debts	1,000
		By Cash received by Branch	6,11,000
		By Balance c/d	1,25,200
	7,43,400		7,43,400

(iv) Dr. Memorandum Branch Petty Cash Account Cr.

Particulars

To Balance b/d

To Remittance from H.O.

250

7,870

By Petty Expenses A/c By Balance c/d

8,000

120

8,120

Q15) The following information and particulars relate to New Delhi Branch for the year 1989 - 1990

31/3/1989 ()

31/3/1990 ()

Stock

Debtors Petty Cash

50,000

70,000

250

75,000

95,000

120

Goods costing 5,50,000 was sold by the Branch @ 25% on cost. Cash sales amounted to 1,50,000 and the rest credit sales. Branch spent 30,000 for salaries, 12,000 for rent and 8,000 for petty expenses (all expenses were remitted by Head Office)

You are requested to show the New Delhi Branch Account in the books of Head office for the year 1989-90 and prove your Solution by preparing a Branch Trading and Branch P/L A/c.

A15) Dr. New Delhi Branch Account Cr.

Particulars		Particulars
To Opening Balances:		By Cash A/c [Sent to H.O.)
Branch Stock	50,000	Cash Sales 1,50,000
Branch Debtors	70,000	Collection from Debtors 5,12,500	6,62,500
Branch Petty Cash	250	By Closing Balances:
To Goods sent to Branch. (W/N i)	5,75,000	Branch stock	75,000
To Cash: (sent by H.O.)		Branch Debtors.	95,000
Salaries 30,000		Branch Petty cash.	120
Rent 12,000
Petty Exp. (W/N) 7,870	49,870
To Net Profit	87,500
	8,32,620		8,32,620

Working Notes:

Dr. (i) Memo. Branch Stock A/c. (at cost) Cr.

Particulars

To Balance b/d

To Goods sent by H.O.(Balancing figure)

50,000

5,75,000

By Cost of goods sold

By Balance c/d.

5,50,000

75,000

6,25,000

6,25.000

All expense are paid by H.O., therefore it is duty of Branch to send all cash sales & coll. From debtor to H. O. No mark up for Goods sent is given, therefore we will assume goods sent at cost price to branch.

Dr. (ii) Memo. Branch Debtors A/c. Cr.

Particulars

To Balance b/d To Credit sales

70,000

5,37,500

By Cash (Bal. Fig.) By Balance c/d.

5,12,500

95,000

6,07,500

Dr. (iii) Branch Petty Cash A/c. Cr.

Particulars

To Balance b/f

To Cash (Received from H.O.) Balancing figure.

250

7,870

By Petty Expenses'(paid by branch)

By Balance c/d.

8,000

120

8,120

Note: Total Sales = 5,50,000 + 1,37,500 = 6,87,500 Credit Sales = 6,87,500 –1,50,000 = 5,37,500

Branch Trading and Profit & Loss A/c

Dr. (For the year ended 31st March, 89) Cr.

Particulars		Particulars
To Opening Stock To Goods sent to branch To Gross Profit c/d. To Salaries.	50,000 5,75,000 1,37,500 _______ 7,62,500 30,000	By Sales: Cash sales Credit Sales By Closing stock By Gross Profit b/d	1,50,000 5,37,500 75,000 7,62,500 1,37,500
To Rent. To Petty Expenses. To Net profit	12,000 8,000 87,500
	1,37,500		1,37,500

Q16) Shahrukh Ltd. Of Delhi has a branch at Bhivani. Goods are invoiced to the branch at cost plus 25%. The branch does not maintain account books and all collections at the branch are remitted to head office. The expenses of the branch are reimbursed by the office. From the following particulars, prepare the branch account in the books of head office for the six months ending on 30th September, 2001.

Particulars		Particulars
Opening Stock		Bad debts Trade discount to customers (already taken into account while invoicing) Goods sent to branch on 27.9.2001, Received by branch on 5.10.2001 Cash sent to branch for expenses Cash discount allowed to customers Balances on 30.9.2001: Stock Debtors Petty cash Depreciate Furniture @ 20%.	400
(at cost to head office)	55,000
Opening Debtors	15,000
Opening Furniture	12,000		12,000
Opening Petty Cash	500
Transactions for six months:			1,500
Goods received from head office	2, 25,000		10,500
Cash sales	1, 95,000		800
Credit sales	80,000
Goods returned to head office	12,750		5,600
Normal loss	1,000		?
Sales returns by customers			500
To branch	500
Cash received from debtors	50,000
Bills receivable received from
Customers at branch	15,000

A16) Bhivani Branch Account

Particulars		Particulars
To Opening Balances:		By Stock reserve,	13,750
Stock ( 55,000 + 13,750)	68,750	By Bank (Remittance):
Debtors	15,000	Cash sales 1, 95,000
Furniture.	12,000	Cash from debtors 50,000	2, 45,000
Petty cash	500	By Goods sent to Branch
To Goods. Sent to branch A/c	2,26,500	(returns to HO)	12,750
( 2,25,000 + 1,500)		By Goods sent to branch A/c
To Bank (expenses)	10,500	2,26,500 × 1/5	45,300
To Stock Reserve (1/5 of 7,100)	1,420
To Net Profit transferred to		By Closing Balances:
Profit and Loss A/c	41,280	Debtors	28,300
To Goods sent to Branch	2,550	Stock ( 5,600 + 1,500)	7,100
(12,750 × 1/5)		Bills receivable	15,000
		Furniture (12,000 × 90%)	10,800
		Petty cash	500
	3,78,500		3,78,500

Working Note: (1)

Dr. Memorandum Branch Debtors Account Cr.

Particulars		Particulars
To Balance b/d	15,000	By Sales returns	500
To Credit sales	80,000	By Bad debts'	400
		By Bills receivable	15,000
		By Bank	50,000
		By Discount	800
		By Balance c/d (b.f.)	28,300
	95,000		95,000

Q17) Sell Well who carried on a retail business opened a branch X on January 1st, 2013 where all sales were on credit basis. All goods required by the branch were supplied from the Head Office and were invoiced to the branch at 10% above cost.

The following were the transactions:

	Jan. ‘2013	Feb. ‘2013	March ‘2013
Goods sent to Branch (Purchase Price)	40,000	50,000	60,000
Sales as shown by the branch monthly report	38,000	42,000	55,000
Cash received from Debtors and remitted to H.O.	20,000	51,000	35,000
Returns to H.O. (Invoice price to Branch)	1,200	600	2,400

The stock of goods held by the branch on March 31, 2013 amounted to 53,400 at invoice to branch. Record these transactions in the Head Office books, showing balances as on 31st March, 2013 and the branch gross profit for three months ended on that date.

All workings should form part of your solution

A17)

Particulars

To Balance b/d

To Goods sent to Branch (1,50,000 + 10%)

To Branch Adjustment A/c

Nil

1,65,000

27,600

By Goods sent to Branch (return)

By Sales Branch debtor By c/d

4,200

1,35,000

53,400

1,92,600

Q18) Modi Sales Ltd. Morinagar has branch at Delhi. Goods are supplied to branch at a profit of 20% on sale price. A/cs are kept at head office from where all expenses (except petty expenses) are paid. Such petty expenses are paid by the branch which is allowed to maintain petty cash balance of 500 on imprest system. From the following balances as shown by books, prepare Branch A/c.

Particulars

Balance as on 1st Jan., 1992:

Petty cash in hand at Branch

Stock at Invoice price

Sundry Debtors at Branch Sundry Creditors at Branch

500

20,000

4,000

1,200

Cash paid by branch to creditors Creditors as on 31.12.1992 Payments made by H.O.:

Rent for one year (Paid on 1st April 92) Salaries

8,000

3,000

2,000

3,000

Furniture at Branch	10,000	Insurance paid for the year ending 31st
Rent prepaid (up to 31st March 1992)	400	March, 1993	800
Transactions for the year ended		Payment made by Branch:
31st Dec., 1992 were follows:		Petty Expenses	300
Goods sent to Branch	1,05,000	Balance on 31 Dec., 1992
Cash Sales at Branch	80,000	Stock at cost	30,000
Credit Sales at Branch	45,000	(Cost of goods supplied by H.O.)
Allowances to Debtors	500	Write off Dep. @ 10% p.a. On furniture.
Bad debts written off	200
Collection from Debtors	40,000

A18)

Dr. (for the period from 1.1.1992 to 31.12.1992) Cr.

Particulars		Particulars
To Opening Balances:		By Opening Balances: Creditors By Cash (remitted by Branch) By Stock Reserve (20,000  20/100) By Goods sent to Branch (1,05,000  20/100) By Closing Balance: Petty Cash 500 Stock 37,500 Debtors 8,300 Furniture 9,000 Prepaid rent 500 Prepaid Insurance 200
Petty Cash 500			1,200
Stock 20,000			1,12,000
Debtors 4,000
Furniture 10,000			4,000
Prepaid Rent 400	34,900
To Goods sent to Branch	1,05,000		21,000
To Cash :
Rent 2,000
Salaries 3,000
Insurance 800	5,800
To Cash (Petty Expenses)	300
To Stock Reserve (37,500  20 /100	7,500
To Closing Balance Creditors	3,000
To Net Profit	37,700
	1,94,200		1,94,200

Working Notes:

(i) Calculation of Closing Debtors.

Dr. Memorandum Branch Debtors Account Cr.

Particulars		Particulars
To Balance b/f	4,000	By Allowances	500
To Sales (Credit)	45,000	By Cash Received	40,000
		By Bad Debts	200
		By Balance c/d	8,300
	49,000		49,000

(ii) Petty cash is maintained on imprest system, Head Office will reimburse petty expenses paid by Branch. Therefore, closing balance of petty cash will remain at 500.

(iii) Calculation of cash remitted by Branch to Head Office.

Cash Sales 80,000

Collections from Debtors 40,000

1,20,000

Less: Paid to Creditors 8,000

Cash remitted to H.O. 1,12,000

(iv) Prepaid Rent as on 31.12.92

Rent paid for the period from 1.4.92 to 31.3.93 2,000

Prepaid for 3 months (2000 x 3/12)

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