Decentralized Branches

Mwambao Ltd commenced business on January 1st 2016 with the head office in DSM and a
branch in Dodoma, selling smoked Fish. Purchases were made exclusively by the H/ Office
where all fish were smoked (processed) before sale and there were no loss during processing.
Only processed fish from H/office were handled by the branch and there were invoiced there to
at processing cost plus 20%.

All sales whether by H/Office in branch were at Gross Profit of 50% of the processing cost.
The following trial balance as on 31st Dec 2016 were extracted from the books before adjusting
for any of the matters referred to below:

Head Office Dodoma Branch

DR CR DR CR
OSC 25,500
Purchases 196,950
Cost of processing 5,050
Sales 128,000 82,000
Goods received/ sent 92,400 88,000
Selling & Admin 18,900 2,120
Personal Ledgers 30,960 60,140 11,360 1,080
H/O Branch CA 38,980 26,150
Bank 15,200 7,750
306,040 306,040 109,230 109,230

Additional information

(i) Some goods Invoiced by H/O to branch 1st Dec 2016 were not received until January
2017. Any necessary adjustment in respect of these items are to be made in the
H/Office Accounts.
(ii) Stock taking at the branch disclosed a shortage of smoked fish of the selling value of
Tzs. 2000
(iii) These cost of stock of unprocessed fish at the H/Office on Dec 31 st 2016 was Tzs 10,000

Required:

Prepare in columnar form for the H/Office, the branch and business as a whole

a) Trading , profit and loss a/c for the year ended Dec. 31 st 2016
b) Balance sheet as at that date
 Trading, Profit and loss Account
H/O Branch Total H/O Branch Total
Op. Stock s - - - Sales 128,000 82,000 210,000
Purchases 196,950 196,950 Goods sent 92,400
Unprocessed (10,000) 10,000 GIT 3,667
186,950 186,950 Shortage 1,600 1,333
Add:
Processing cost 5,050 5,050
CGAFS 192,000 192,000
Received Goods 88,000
192,000 88,000 192,000
Clossing stock 29,667 20,800 47,000
Cost os salles 162,333 67,200 145,000
Gross Profit 58,067 16,400 70,000
220,400 83,600 215,000 220,400 83,600 215,000
PUP 4,200 Gross Profit 58,067 16,400 70,000
Shortage 1,600 1,333
Selling expenses 18,900 2,120 21,020
Net Profit 34,967 12,680 47,647
53,067 16,400 70,000 53,067 16,400 70,000

Balance Sheet
H/O Branch Total H/O Branch Total
OSC 25,500 25,500 Branch a/c 38,830
Good sent 60,140 1,080 61,220 Debtors 30,960 11,360 42,320
P. U. P 4,200 Stock 29,667 20,800 47,000
P&L (H/O). 47,647 47,647 Unprocessed 10,000 10,000
H/O CA 38,830 GIT 4,400 3,667
Bank 15,200 7,750 22,950
CIT 8,430 8,430
137,487 39,910 134,367 137,487 39,910 134,367