201.08 Branch Accounting

Special Class note for
CMA Professional Level –II

201-Advanced Financial Accounting-I
CMA
Professional Level –II
Branch Accounting
Special 201.08 Branch Accounting systems for branches;
Class-6 Accounting preparation of branch and home office statements;
preparation of combined statements;
nd
adjustments for reciprocal accounts;
2 special branch and home office relationships;
Session
inter branch transfer of merchandise and cash;
branch billing at arbitrary rate above cost or at retail sales price;
combined financial statements.
Classification of Branches: From an accounting point of view, branches are classified as:
BRANCHES
Inland Braches (A) Foreign Branches (B)
Not maintaining a complete Maintaining a complete set of

set of Books (I) Books (II)
(Dependent branch) (Independent branch)
Goods invoiced to Branch Goods invoiced to Branch at Goods invoiced at cost plus
at cost (a) Selling Price (b) some % (c)
Analytical Method (i) Synthetic Method

(Stock & debtors Method) (Debtors Method) (ii)
In case of (A)(I)(a)(i):
Accounting Entries in the books of Head Office (H.O.):
No. Particulars Debit Credit
1. For Cost Price of Goods sent to Branch:
Branch Stock A/c Dr XXX
To Goods Sent to Branch A/c XXX
2. For Cost Price of Goods returned by Branch:
Goods Sent to Branch A/c Dr XXX
To Branch Stock A/c XXX
3. For remittance to Branch for expenses:
Branch Cash A/c Dr XXX
To Bank A/c XXX
87
Md.Monowar Hossain FCMA,FCPA,ACS,ACA Friday, June 20, 2014
Audit Consultant (General Manager),
Rupali Bank Ltd.
4. For cash sales at Branch:

Bank A/c [(or) branch cash, if money is not immediately
remitted] Dr XXX
5. For credit sales at Branch:
Branch Debtors A/c Dr XXX
6. For Goods returned to Branch by customers:
Branch Stock A/c Dr XXX
To Branch Debtors A/c XXX
7. For Cash collected from Branch Debtors:
Bank A/c [(or) branch cash, if money is not immediately
remitted] Dr XXX
To Branch Debtors A/c XXX
8.
For Discount & Allowances to Debtors & Bad Debts:
Branch Profit & Loss A/c Dr
XXX
To Branch Debtors A/c
XXX
9. For remittances to Head Office:
Bank A/c Dr XXX
To Branch Cash A/c XXX
10. For Branch expenses:
Branch Expenses A/c Dr XXX
To Bank A/c XXX
(or branch cash, if met by branch)
11. For Purchase of any Fixed Asset at Branch:
Branch Asset A/c Dr XXX
To Bank A/c XXX
(or branch cash, if paid for by the branch)
12. For Depreciation on Branch Assets:
Branch Profit & Loss A/c Dr XXX
To Branch Assets A/c XXX
13. For abnormal Loss and Goods:
Branch Profit & Loss A/c (or) Dr XXX
Insurance Claim A/c (if covered Insurance) Dr XXX
Ledger Accounts and their details:
Branch Stock A/c: Value of opening stock is shown as opening balance on the debit side of Branch Stock A/c.
Similarly, value of closing stock is shown as closing balance on the credit side of Branch Stock A/c. The balance of
Branch Stock A/c will now represent Gross Profit/Loss at the branch to be transferred to Branch Profit and Loss A/c.
Branch Expenses A/c: The balance of Branch Expenses A/c will also be transferred to Branch Profit & Loss A/c.
Branch Debtors A/c: The balance of this Account represents the closing Debtors.
Goods sent to Branch A/c: The balance of this account should be t/s to Purchase A/c.
Branch Profit & Loss A/c: The balance of Branch Profit and Loss A/c will represent Net Profit/Loss at the branch to be
transferred to General Profit and Loss A/c.
Note: Normal Loss need not be recorded separately.
88
Rupali Bank Ltd.
In case of (A)(I)(a)(ii): Under this method it is assumed that the branch has a separate entity apart from the head office
and, on this basis, a branch account is opened separately for each branch in the books of head office. This account is
debited with the value of benefits and cash given to the branch and correspondingly credited with the value of benefits
and cash received from the branch.
Branch A/c
Particulars Tk. Particulars Tk.
To Balance b/d By Bank XXX
Branch Stock XXX (Amount remitted by Branch)
Branch Debtors XXX By Goods sent to Branch XXX
Branch Petty Cash XXX XXX (Return to H.O)
To Goods sent to branch XXX By Balance c/d:
To Bank XXX Branch Stock XXX
(Amount remitted to branch) Branch Debtors XXX
To Bank XXX Branch Petty Cash XXX
(Branch Exp.’s paid by H.O.) XXX
To General P & L A/c XXX
XXX XXX
In case of (A)(I)(b&c)(i):
Accounting Entries in the books of Head Office: Under this system, in addition to the accounting entries passed in case of
invoicing goods at cost price, the following entries are passed:
No. Particulars Amount Tk.

1. For Goods sent to Branch:
a. Branch Stock A/c Dr Invoice price
To Goods Sent to Branch A/c
b. Goods Sent to Branch A/c Dr Load on goods sent
To Branch Stock Adjustment A/c
2. For Goods returned by Branch to H.O.:
a. Goods Sent to Branch A/c Dr Invoice price
To Branch Stock A/c
b. Branch Stock Adjustment A/c Dr Load on goods returned
To Goods Sent to Branch A/c
Ledger Accounts and their details:
a. Branch Stock A/c: There will be an opening balance in this account representing opening stock at branch at selling
price and a closing balance representing closing stock at branch at selling price. After all the relevant entries have
been passed to this account as already detailed, both sides of this account should agree. Any difference represents
surplus or deficiency of stock and will be transferred to a stock discrepancy account. The stock discrepancy account
will be closed by transferring the load to branch stock adjustment account and the balance to branch profit & loss
A/c.
b. Branch Stock Adjustment A/c: This account will be created with the Stock Reserve A/c for the loading included in the
opening branch stock (at selling price). Similarly, this account is debited with the Stock Reserve A/c for loading
included in the closing branch stock. The difference remaining in this account (after all the relevant entries have
been passed) represents gross profit/loss at branch and will be transferred to branch Profit & Loss A/c.
c. Loss of Goods: This will be treated in the following manner:
Normal Loss: Since branch stock adjustment account discloses gross profit, normal loss should be charged to this
account by the following entry:
89
Rupali Bank Ltd.
1. Branch Stock Adj. A/c Dr Selling Price

To Branch Stock A/c
Abnormal Loss: The following entries will be passed for recording abnormal loss:
1. Abnormal Loss A/c Dr Selling Price

To Branch Stock A/c
2. Branch Stock Adj. A/c Dr Load on goods lost
To Abnormal Loss A/c
3. Branch Profit & Loss A/c Dr Cost price of goods lost
To Abnormal Loss A/c
If the goods are insured, insurance claim account will be debited instead of branch Profit & Loss A/c to the extent of
claim admitted and the balance will be debited to branch profit & loss A/c.
In case of (A)(I)(b&c)(ii):
Accounting Entries in the books of Head Office:
The branch account will be prepared on the same line as discussed earlier, but as goods are supplied to the branch at
loaded price. (1) Opening stock,
(2) goods sent to branch,
(3) goods returned by branch and
(4) closing stock will be recorded in the branch account at this price.
Hence, in order to ascertain the true profit or loss at branch it will be necessary to eliminate the loads and bring down
these items to cost level.
For this purpose the following adjusting entries will be made:
1. For load on Goods sent to Branch:

Goods Sent to Branch A/c Dr XXX
To Branch A/c XXX
2. For load on Goods returned by Branch to H.O.:
Branch A/c Dr XXX
To Goods Sent to Branch A/c XXX
3. For load included in the Opening Stock:
Stock Reserve A/c Dr XXX
To Branch A/c XXX
4. For load included in the Closing Stock:
Branch A/c Dr XXX
To Stock Reserve A/c XXX
The balance of stock reserve account at the end of each year will be carried forward to the next year for being
transferred to the branch account of that year as shown in item (3) above.
Distinction between Wholesale Profit & Retail profit at Branch:
In order to know whether self-retailing through branches is more profitable than wholesaling, it is necessary to make a
distinction between wholesale profit and retail profit. The true profit of a branch can, therefore, be determined by
charging it with the wholesale price of goods sent and crediting the head office trading account with the same amount.
Since closing stock of branch, in such a case, will be valued at wholesale price it will be necessary to create a provision for
unrealised profit on stock by debiting the head office Profit & Loss A/c.
90
Rupali Bank Ltd.
Example: Let the cost of an Item be Tk.1000, wholesale price be Tk.1400 and retail price be Tk.1500. If it is market rate is
through a detail branch, the profit earned there will be Tk.500. But the true profit of the branch is, however, Tk.100 only,
because Tk.400 could have been earned even without having the branch i.e. by selling it on wholesale basis to others.
In case of (A)(II) (Independent Branches):

Part: I – Special Adjustments:
1. Regarding Goods-in-transit & Remittance-in-transit:
1. If adjustment is made in the books of H.O.:

Goods-in-transit A/c Dr XXX
Cash-in-transit A/c Dr XXX
To Branch A/c XXX
2. If adjustment is made in the books of branch:
Goods-is-transit A/c Dr XXX
Cash-in-transit A/c Dr XXX
To Head Office a/c XXX
In the balance sheet, goods-in-transit or cash-in-transit will be shown as assets. At the commencement of the next
financial year, these entries will be reversed and Transit A/c will be closed.
2. Regarding Depreciation on Fixed Assets: Often, the accounts of fixed assets of a branch are maintained in the head
office books. In such a case,
1. Entry for depreciation in H.O. Books:

Branch A/c Dr XXX
To Branch Fixed Assets A/c XXX
2. The branch passes the following entry in its own books for
Depreciation:
Depreciation A/c Dr XXX
To Head Office A/c XXX
Any purchase of fixed assets by the branch, in such a case, should be debited to head office account and credited to
bank (or Supplier’s A/c) in the branch books. Similarly, in head office books the same should be debited to branch
fixed assets account and credited to Branch A/c.
3. Regarding Inter-Branch Transactions: Where there are number of branches, inter-branch transactions are likely to take
place, e.g., cash or goods sent by one branch to another or expenses incurred by one branch on behalf of another. Such
transactions are usually adjusted assuming that they were entered into under the instructions from the H.O. Suppose
Chittagong branch transfers some goods to Dhaka branch under the directions of the H.O. The entries will be as follows:
1. In the books of Chittagong Branch:

Head Office A/c Dr XXX
To Goods Supplied to Branch A/c XXX
2. In the books of Dhaka Branch:
Goods received from Branches A/c Dr XXX
3. In the books of Head Office:
Dhaka Branch A/c Dr XXX
To Chittagong Branch a/c XXX
Note: Inter-branch transactions without the knowledge of head office may be passed as between the branches
only in the usual manner.
91
Rupali Bank Ltd.
4. Regarding Charges made by H.O.: The head office may make a charge to the branch for services rendered by it, or
for a portion of head office overheads applicable to branch management on the principle that the branch should be
debited with all relevant expenses and charges applicable to it.
1. In head office books the entry will be:

Branch A/c Dr XXX
To The Relevant Expenses A/c XXX
2. In Branch books the entry will be:
The Relevant Expenses A/c Dr XXX
5. Remittances A/c: Sometimes the branch remits cash to the head office quite frequently. In such a case, the head
office finds it convenient to open a branch remittances account. The periodical total of this account will be
transferred to the credit of branch account. If the branch so desires, it can also open a remittances to head office
account the periodical total of which will be transferred to the debit of head office account. Similar treatment can be
made for goods sent to branch also.
Part II – Closing of Branch Books:
Procedure for Closing of Branch Books at a Glance
Closing of Revenue Closing of Assets & Liability

Accounts Accounts
By transferring the By Preparing its own May be closed & May not be
Individual balances Trading and P&L transferred to the closed &
of various revenue A/c and transferring H.O. books. transferred
accounts to the only the Net Profit/ to the H.O.
H.O. A/c Loss to the H.O. A/c books.
Explanation: At the end of each financial year the branch prepares a trial balance and proceeds to close its books of
accounts. The subject of closing the books consists of two activities:
(a) Closing of Revenue accounts;
(b) Closing of Asset & Liability accounts.
Closing of Revenue Accounts: Two different methods may be applied for closing the revenue accounts.
First method: Under this method the branch simply transfers the individual balance of various revenue accounts to the H.O.
A/c, thereby closing the revenue accounts. The entries will be as follows:
1. For debit balances of revenue items:

To Sundry Revenue A/c XXX
2. For credit balances of revenue items:
Sundry Revenue A/c Dr XXX
92
Rupali Bank Ltd.
Second method: Under this method, the branch prepares its own Trading and Profit & Loss A/c and transfers only the Net
Profit or Loss (instead of all the revenue balances) to the H.O. A/c in the same way as Profit or Loss is transferred to
Capital A/c in an ordinary business. The revenue accounts are thus closed, and the Profit or Loss transferred to the H.O.
A/c.
Closing of Asset & Liability Accounts: The balances of Assets & Liabilities may or may not be transferred to the H.O.
books. If it is decided to transfer them, the under mentioned entries will be passed to close the accounts in the branch
books:
1. For Assets:
To Sundry Asset A/c XXX
2. For Liabilities:
Sundry Liability A/c Dr XXX
After such transfer, the H.O. A/c in branch books will have no balance.
Note:
At the commencement of the next accounting period it is necessary to restore the balance of Assets & Liabilities in
the branch books by passing a reverse entry.
If, however, these are not transferred, there will remain a balance in H.O. A/c equal to the net assets (i.e. assets less
liabilities). Thus, in this case, the branch may prepare a Balance Sheet.
Part III – Incorporation of Branch Trial Balance in H.O. Books:
Procedure for Incorporation of Branch Transactions

in Head Office Books at a Glance
Incorporation of Revenue Incorporation of

Accounts Assets & Liability Accounts
By preparing P&L By preparing May be May not be

A/c of the Branch Memorandum Trading incorporated. incorporated.
according to Double and P&L A/c for which
entry principles. there will be no double
entry effect.
Explanation: The branch sends its trial balance (together with its trading and P & L A/c and Balance Sheet, if these are
prepared by the branch) to the H.O. for incorporation in H.O. books.
When the H.O. receives the branch Trial Balance, it proceeds to incorporate the same in its books. The incorporation
procedure may be broken up into two parts:
93
Rupali Bank Ltd.
(a) Incorporation of revenue accounts of branch and
(b) Incorporation of assets and liabilities of branch.
Incorporation of Revenue Accounts: This can be done in two different methods:
First method: Under this method, a Trading and Profit & Loss A/c of the branch is prepared by H.O. The entries to be
passed are as follows:
1.
For items which will appear on the debit side of Trading A/c:
Branch Trading A/c Dr
XXX
To Branch A/c
XXX
2. For items which will appear on the credit side of Trading
A/c:
Branch A/c Dr XXX
To Branch Trading A/c XXX
3. For Gross profit made by branch:
Branch Trading A/c Dr XXX
To Branch P & L A/c XXX
4.
For items which will appear on the debit side of P & L A/c:
Branch P & L A/c Dr
XXX
To Branch A/c
XXX
5. For items which will appear on the credit side of Trading
A/c:
Branch A/c Dr XXX
To Branch P & L A/c XXX
6. For Net Profit made by the branch:
Branch P & L A/c Dr XXX
To General P & L A/c XXX
Second method: Under this method, Branch Trading and Profit & Loss A/c is prepared in H.O. books which is merely a
Memorandum A/c, and therefore, the entries made in this account do not have any double entry effect. The only object
of this Memorandum A/c is to ascertain the net profit/loss of the branch. This net profit/loss is incorporated (and not the
individual balances as in the first method) in the head office books by the following entry:
1. In case of Net Profit:

Branch A/c Dr XXX
To General Profit & Loss A/c XXX
2. In case of Net Loss:
General Profit & Loss A/c Dr XXX
To Branch A/c XXX
Incorporation of Assets & Liabilities: The head office may or may not be incorporate the Assets & Liabilities of the
branch. If incorporated the following entries shall be necessary:
1. For Branch Assets:

Sundry Branch Asset A/c Dr XXX
To Branch A/c XXX
2. For Branch Liabilities:
Branch A/c Dr XXX
To Sundry Branch Liability A/c XXX
94
Rupali Bank Ltd.
After such incorporation of Assets & Liabilities, the Branch A/c (in which adjustment entries have already been posted) in
H.O. books will be closed.
Note:
At the commencement of the next accounting period, the entries passed for incorporation of Assets & Liabilities
will be reversed, and then the Branch A/c will again be restored showing the opening balances of these items.
If the Branch Assets & Liabilities are not incorporated, the Branch A/c in H.O. books will have closing balance
equal to net assets of the branch.
While preparing a Balance Sheet of the H.O. all the Assets & Liabilities of the H.O. and those of the branch will be
taken into consideration.
FOREIGN BRANCHES
Introduction: A Foreign branch usually maintains a complete set of books under double entry principles. So, the
accounting principles of a Foreign Branch will be the same as those applying to an Inland Branch. Before a Trial Balance of
the Foreign Branch is incorporated in the H.O. books, it has to be converted into home currency.
Rules for conversion: In case of fluctuating rates of exchange, the following rules for conversion are applied:
No Nature of Account Exchange Rate Applicable

1. Fixed Assets - Rates ruling at the time they were acquired.
2. Fixed Liabilities - Rates ruling as on the date of the Trial Balance.
3. Current Assets & Liabilities - Rates ruling as on the date of the Trial Balance.
4. Remittances sent by the branch - At the actual rates at which they were made.
5. Goods received from H.O. as well as goods - At the rates ruling on the date of dispatch or the date of
returned to H.O. receipt.
6. The Nominal A/c’s (except next two) - Average rate ruling during the accounting period.
7. Depreciation on Fixed Assets - Rate of conversion applicable in case of the particular
asset concerned [as indicated in (a) above].
- Rates ruling of on the opening and closing dates
8. Opening and Closing stocks respectively.
- Value at which the Branch A/c appears in H.O. books on
9. Balance in H.O. A/c the date.
Difference in Exchange: As a result of conversion of branch trial balance in home currency, a difference in the trial
balance is will often arise. If a loss (Dr.) results, it should be debited to Profit & Loss A/c, if a profit (Cr.) results, the
prudent course is to credit it to an exchange Reserve A/c so as to provide for future losses on exchange.
95
Rupali Bank Ltd.
Problem No.22 [Branch Accounting (Including Independent Branches and Foreign Branches) Maximum marks: 20
MMH Ltd., Dhaka, have a branch in Sydney, Australia. At the end of 31st March, 2014, the following ledger balances have
been extracted from the books of the Dhaka Office and the Sydney Office :
Dhaka . Sydney .
(Tk. thousands) (Australian dollars thousands)
Debit Credit Debit Credit
Share Capital – 2,000 – –
Reserves & Surplus – 1,000 – –
Land 500 – – –
Buildings (Cost) 1,000 – – –
Buildings Dep. Reserve – 200 – –
Plant & Machinery (Cost) 2,500 – 200 –
Plant & Machinery Dep. Reserve – 600 – 130
Debtors / Creditors 280 200 60 30
Stock (1.4.13) 100 – 20 –
Branch Stock Reserve – 4 – –
Cash & Bank Balances 10 – 10 –
Purchases / Sales 240 520 20 123
Goods sent to Branch – 100 5 –
Managing Director’s salary 30 – – –
Wages & Salaries 75 – 45 –
Rent – – 12 –
Office Expenses 25 – 18 –
Commission Receipts – 256 – 100
Branch / H.O. Current A/c 120 – – 7
4,880 4,880 390 390
The following information is also available :

(1) Stock as at 31.3.2014 :
Dhaka Tk. 1,50,000
Sydney A $ 3,125
(2) Head Office always sent goods to the Branch at cost plus 25%.
(3) Provision is to be made for doubtful debts at 5%.
(4) Depreciation is to be provided on buildings at 10% and on plant and machinery at 20% on written down values.
(5) The Managing Director is entitled to 2% commission on net profits.
(6) Income–tax is to be provided at 47.5%.
Required:
(a) To convert the Branch Trial Balance into taka;

(use the following rates of exchange :
Opening rate A $ = Tk.20
Closing rate A $ =Tk.24
Average rate A $ = Tk.22
For Fixed Assets A $ = Tk.18).
(b) To prepare the Trading and Profit & Loss Account for the year ended 31st March, 2014 showing to the extent
possible H.O. results and Branch results separately. (Balance Sheet not required.)
96
Rupali Bank Ltd.
Solution of problem no.22 [Branch Accounting (Including Independent Branches and Foreign Branches)
(a) MMH Ltd.

Sydney Branch Trial Balance (in Taka)
As on 31 st March, 2014
____________________________________________________________________________
(Tk. ‘000)
Conversion Dr. Cr.
rate per A$
_____________________________________________________________________________
Plant & Machinery (cost) Tk. 18 36,00
Plant & Machinery Dep. Reserve Tk. 18 - 23,40
Debtors / Creditors Tk. 24 14,40 7,20
Stock (1.4.94) Tk. 20 4,00
Cash & Bank Balances Tk. 24 2,40
Purchase / Sales Tk. 22 4,40 27,06
Goods received from H.O. – 1,00
Wages & Salaries Tk. 22 9,90
Rent Tk. 22 2,64
Office expenses Tk. 22 3,96
Commission Receipts Tk. 22 - 22,00
H.O. Current A/c 1,20
78,70 80,86
Exchange loss (balancing figure) 2,16 .
80,86 80,86
____________________________________________________________________________
(b) Trading and Profit & Loss Account
for the year ended 31st March, 2014
(Tk.’000)
H.O. Branch Total H.O. Branch Total
To Opening Stock 1,00 4,00 5,00 By Sales 5,20 27,06 32,26

“ Purchases 2,40 4,40 6,80 “ Goods sent to 1,00 – 1,00
“ Goods received – 1,00 1,00 Branch
from Head Office “ Closing Stock 1,50 75 2,25
“ Gross profit c/d 4,30 18,41 22,71
7,70 27,81 35,51 7,70 27,81 35,51

By Gross profit b/d 4,30 18,41 22,71
To Wages & Salaries 75 9,90 10,65 By Commission
receipts 2,56 22,00 24,56
“ Rent – 2,64 2,64
“ Office expenses 25 3,96 4,21
“ Provision for doubtful
debts @ 5% 14 72 86
“ Depreciation 4,60 2,52 7,12
(W. N. 1)
“ Balance c/d 1,12 20,67 21,79
6,86 40,41 47,27 6,86 40,41 47,27

97
Rupali Bank Ltd.
To Exchange loss 2,16 By Balance b/d 21,79

“ Branch Stock Reserve 11
(W. N. 2)
“ Managing Director’s
remuneration :
Salary 30
Commission 41 71
(W. N. 3)
Provision for Income-tax 8,93
(W. N. 4)
“ Balance c/d 9,88
21,79 21,79
Working Notes :
(1) Calculation of Depreciation : (Tk. ‘000)
H.O. Branch
A. Building – Cost 10,00 –
Less : Dep. Reserve 2,00 –
8,00
Depreciation @ 10% 80
B. Plant & Machinery Cost 25,00 36,00

Less : Dep. Reserve 6,00 23,40
19,00 12,60
Depreciation @ 20% 3,80 2,52
Total Depreciation (A+B) 4,60 2,52
(Tk.‘000)
(2) Calculation of Branch Stock Reserve :
Closing stock 75
Reserve on closing stock (75 × 1/5) 15
Less : Branch Stock Reserve (as on 1.4.13) 4
Additional Reserve required 11
(Tk.’000)
(3) Calculation of Managing Director’s Commission :
Profit before adjustment 21,79
Add: Provision for doubtful debts 86
22,65
Less: Branch stock reserve 11
Exchange loss 2,16 2,27
Profit 20,38
Commission @ 2% 41 (approx.)
98
Rupali Bank Ltd.
(4) Calculation of provision for Income tax : (Tk.‘ 000)

Profit as computed above 20,38
Less : Provision for doubtful debts 86
MD’s remuneration 71 1,57
Profit before tax 18,81
Provision for tax @ 47.5% 8,93** (approx.)
**Alternatively provision for tax may also be computed on Tk. (000) 19,67 ignoring provision for doubtful debts.
Problem No.23 [Branch Accounting] Maximum Marks: 10
Head Office passes adjustment entry at the end of each month to adjust the position arising out of inter–branch
transactions during the month. From the following inter–branch transactions in January, 2014, make the entry in the
books of Head Office :
(a) Dhaka Branch

(1) Received Goods : Tk. 6,000 from Chittagong Branch, Tk. 4,000 from Comilla Branch.
(2) Sent Goods to Tk. 10,000 to Comilla, Tk. 8,000 to Chittagong.
(3) Received B/R : Tk. 6,000 from Comilla.
(4) Sent Acceptance : Tk. 4,000 to Chittagong, Tk. 2,000 to Comilla.
(b) Barisal Branch (Apart from the above)

(5) Received Goods : Tk. 10,000 from Chittagong, Tk. 4,000 from Dhaka.
(6) Cash Sent : Tk. 2,000 to Chittagong, Tk. 6,000 to Dhaka.
(c) Chittagong Branch (Apart from the above)

(7) Sent Goods to Comilla : Tk. 6,000.
(8) Paid B/P : Tk. 4,000 to Comilla, Tk. 4,000 cash to Comilla.
Solution of problem no.23 [Branch Accounting] Maximum Marks: 10
In the Books of Head Office

Journal
______________________________________________________________________
Date Particulars Dr. Cr.
Tk. Tk…….
2014
Jan 31 Barisal Branch A/c Dr. 6,000
Comilla Branch A/c Dr. 16,000
To Dhaka Branch A/c 6,000

To Chittagong Branch A/c 16,000
(Being adjustment entry passed by head
office in respect of inter–branch transactions
during the month.)
__________________________________________________________________________
99
Rupali Bank Ltd.
Working Note :
Inter – branch transactions .

Dhaka Barisal Chittagong Comilla
Tk. Tk. Tk. Tk.
_______________________________________________________________________
(a) Dhaka Branch

(1) Received Goods 10,000 (Dr.) 6,000 (Cr.) 4,000 (Cr.)
(2) Sent Goods 18,000 (Cr.) 8,000 (Dr.) 10,000 (Dr.)
(3) Received B/R 6,000 (Dr.) 6,000 (Cr.)
(4) Sent Acceptance 6,000 (Cr.) 4,000 (Dr.) 2,000 (Dr.)
(b) Barisal Branch

(5) Received Goods 4,000 (Cr.) 14,000 (Dr.) 10,000 (Cr.)
(6) Cash Sent 6,000 (Dr.) 8,000 (Cr.) 2,000 (Dr.)
(c) Chittagong Branch

(7) Sent Goods 6,000 (Cr.) 6,000 (Dr.)
(8) Paid B/P and Cash 8,000 (Cr.) 8,000 (Dr.)
6,000 (Cr.) 6,000 (Dr.) 16,000 (Cr.) 16,000 (Dr.)
Homework:
16. Question No.2 of CMA Exam: August-2013
17. Question No.4 of CMA Exam: December-2012
100
Rupali Bank Ltd.

201.08 Branch Accounting

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

201.08 Branch Accounting

Uploaded by

Copyright:

Available Formats

Special Class note for

CMA Professional Level –II

Inland Braches (A) Foreign Branches (B)

Not maintaining a complete Maintaining a complete set of

Analytical Method (i) Synthetic Method

4. For cash sales at Branch:

Ledger Accounts and their details:

Note: Normal Loss need not be recorded separately.

No. Particulars Amount Tk.

Ledger Accounts and their details:

1. Branch Stock Adj. A/c Dr Selling Price

1. Abnormal Loss A/c Dr Selling Price

1. For load on Goods sent to Branch:

Distinction between Wholesale Profit & Retail profit at Branch:

In case of (A)(II) (Independent Branches):

1. Regarding Goods-in-transit & Remittance-in-transit:

1. If adjustment is made in the books of H.O.:

1. Entry for depreciation in H.O. Books:

1. In the books of Chittagong Branch:

1. In head office books the entry will be:

Part II – Closing of Branch Books:

Procedure for Closing of Branch Books at a Glance

Closing of Revenue Closing of Assets & Liability

1. For debit balances of revenue items:

Part III – Incorporation of Branch Trial Balance in H.O. Books:

Procedure for Incorporation of Branch Transactions

Incorporation of Revenue Incorporation of

By preparing P&L By preparing May be May not be

(a) Incorporation of revenue accounts of branch and

(b) Incorporation of assets and liabilities of branch.

Incorporation of Revenue Accounts: This can be done in two different methods:

1. In case of Net Profit:

1. For Branch Assets:

No Nature of Account Exchange Rate Applicable

The following information is also available :

(a) To convert the Branch Trial Balance into taka;

(a) MMH Ltd.

To Opening Stock 1,00 4,00 5,00 By Sales 5,20 27,06 32,26

7,70 27,81 35,51 7,70 27,81 35,51

6,86 40,41 47,27 6,86 40,41 47,27

To Exchange loss 2,16 By Balance b/d 21,79

(1) Calculation of Depreciation : (Tk. ‘000)

B. Plant & Machinery Cost 25,00 36,00

Total Depreciation (A+B) 4,60 2,52

(4) Calculation of provision for Income tax : (Tk.‘ 000)

Problem No.23 [Branch Accounting] Maximum Marks: 10

(a) Dhaka Branch

(b) Barisal Branch (Apart from the above)

(c) Chittagong Branch (Apart from the above)

Solution of problem no.23 [Branch Accounting] Maximum Marks: 10

In the Books of Head Office

To Dhaka Branch A/c 6,000

Inter – branch transactions .

(a) Dhaka Branch

(b) Barisal Branch

(c) Chittagong Branch

6,000 (Cr.) 6,000 (Dr.) 16,000 (Cr.) 16,000 (Dr.)

You might also like