Branch Accounting Introduction A branch may be defined as a section of an enterprise, geographically separated from the rest ofthe business, ‘controlled by a head office, and generally carrying on the same activities as of the enterprise. As a business ‘grows, it may open up branches in different towns ané cities in order to market its products/services over a large teritory and thus increase its profits. For example, Bata Shoe Co. Lt. has branches in various cities all ‘over the country. The same example holds good for a commercial bank also "As per the provisions of Section 2(14) of the Companies Act, 2013, branch office in relation to a company ‘means any establishment described as a branch by the company.” It should be mentioned that a branch is not a separate legal entity. itis simply a segment of a business. From an accounting standpoint, a branch is clearly identifiable profit centre. In order to exercise greater ‘control over the branches itis necessary to ascertain profit or loss made by such branches separately. Apart, from this, specialised accounting techniques have to be adopted for controlling various branch activities and for their smooth running, both atthe branch level and atthe head office level, The systems of accounting vary between different enterprises in accordance with their type of activities, methods of operation and the preferences of theit managements. Need for Branch Accounting Though a branch is typically located at some distance from the head office, it caries on a its activities under its direction and control. Therefore, itis necessary thatthe head office and the branch obtain information froma either side at regular intervals about the proper functioning ofthe branch, This requires the head office and the branch to keep proper books of accounts, The need for branch accounting arises as to (a) ascertain the profitability of each branch separately fora particular accounting period, (b) _ ascertain the financial position of each branch separately atthe end of that accounting period, (c) assess the progress and performances of each branch, (@) fulfill he audit requirements under Section 228 of the Companies Act, 1956, (©) _ incorporate the profit or loss made by the branch and is assets and liabilities in the firm's final accounts, (D) ascertain the requirements of stock and eash for each branch, (g) ascertain whether the branch is yielding a satisfactory rate of retumn on capital invested in it7.2 Branch Accounting (2) ascertain whether the branch should be expanded or closed, (ascertain the quantity of stock held by each branch at the end of that accounting period, and (ascertain the amount of commission payable to the manager, if that is based on profits, Types of Branches From an accounting point of view, the branches can be divided into the following main clases: (1) Home Branches (a) Dependent branches (where the head office maintains all the accounts) (b) Independent branches (where the branch keeps its own accounts) (2) Foreign Branches ‘They almost invariably trade independently and record their transactions in foreign currency. Generally, such branches are registered under the respective laws of the nation, ‘Types of Branches Home Branches Foreign Branches | Dependent Branches Independent Branches Dependent Branches When the policies and administration ofa branch are totally controlled by the head office, who also maintains its accounts, the branch is called a dependent branch. ‘The following are the different types of dependent branches: ‘Types of Dependent Branches Service Branches Retail Selling Branches Booking orders Goods transferred from ‘on behalf of the Hoad Office at cost, Head Office Goods transferred from Executing [—— Head office at loaded ‘orders from (Invoice) price Head Office {wholesale PriceFinancial Accounting - Il_7.3 Service Branches These branches are booking or executing orders on behalf ofthe head office. The accounts relating to these types of branches consist mainly of expenditure accounts for salaries, wages, travelling and miscellancous ‘expenses, ec, Generaly the branch manager is provided with a small nd (similar to a petty cash fund, which is replenished periodically) to pay for small items of expense. The branch manager is required to subrait periodical (weekly or monthly) expenditure statements tothe head office, upon receipt of which the head office forwards a replacement cheque oF make on-line transfer forthe otal amount of expenditure. For proper contro ofbranch expenditure, the expenditre returns are analysed and toll of each typeof expenditure ae debited to the appropriate Branch Expenditure Account and credited to the Branch Cash Account inthe head office ‘books. At the time of preparation of final accounts of the head office, the different Branch Expenditure Accounts are transferred o the Profit and Loss Account of the head office. Retail Selling Branches For retail selling branches, the head office not only maintains all accounting records but also manufactures or ppurchases all or most of the required stock in bulk quantity. It is often found the most practical and economical ‘way for the head office, (particularly with increasingly widespread use of sophisticated computers which can ‘communicate with one another using telephone services), to undertake all the book-keeping and accounting ‘work required, a it simply involves asking for regular ‘returns’ from the various branches. This practice is very uselul for those organisations which operate on a large scale with numerous branches, with each branch practically being no more than a sales depot or selling outlet. The main features of retail branches are as follows: 1. Aseparate record of branch asses, liabilities, revenues and expenses is maintained by the head office. ‘These branches maintain records of sles and petty expenses only but may also keep debtors accounts, i necessary. They also maintain stock register and furnish weekly or monthly stock statements to H.O. 2. All business documents originating atthe branches are transmitted to the head office 3. Goods are transferred by the head office to such branches either at cost or at loaded (invoice) price ‘which are fixed nationally or on a local basis by the head offi, The branch manager has no discretion in the fixation of price and has to sel the goods at agreed upon prices 4, Except with the permission of the head oifice, such branches are not allowed to buy goods locally from the open market. Goods are generally sold by such branches in cash, Though granting of eredit is usually forbidden, such branches can sell goods on credit with the permission ofthe head office. 6. The amount collected from cash sales or debtors is either remitted to head office immediately (the same or next day) or banked intact in the account of the head office in some local bank. 7. A.working fund for the branch is established and is replenished as needed, All major expenses of the branch are paid, a far as possible, by the head office. The branch manager is allowed to pay salaties and wages ofthe branch staff He i allowed to incur only petty expenses like postage, telephone, etc. Accounting Arrangements of Retail Dependent Branches ‘The accounting arrangement ofa branch depends upon its size, the ype of activites, the method of operation and the degree of control to he exercised by the head office, There ars three main methods of accounting for branch transactions, viz. 1 Debtors System 2. Stock and Debtors System 3. Final Accounts System Debtors System This system of accounting is suitable for the small-size branches. Under this, a Branch Account is opened for ‘each branch inthe head office ledger. All transactions relating to that branch are recorded in this accoust, The Branch Account is prepared in such a way that it discloses the profit or loss of the branch, Head office may send goods to branch either at "cast price" or "selling price” (also called invoice price). The accounting procedure in these two cases is slightly different. Therefore, we will discuss them separately74 Branch Accounting Cost Price Method : Under this method, at the beginning ofthe year the Branch Account is debited with the opening balances of assets such as stock (at cost), debtors, petty cash, furniture, prepaid expenses, accrued income, ete. lying with tae branch, Similarly, itis credited with the opening balances of liabilities of the branch such as, creditors, outstanding salaries, rent ete. ‘The Branch Account is then debited withthe amount of goods sent to the branch (at cost) and other amounts, remitted to meet various expenses such as, salaries, rent, rates and taxes, ct. Likewise, the Branch Account is credited withthe retura of goods (at cost) by the branch, and receipts from debtors and cash sales. Atthe year tend, Branch Account is debited with the closing values of liabilities and eredited with the closing values of assets, The difference between the two sides represents profit ar loss for the branch for a particular perio. Journal Entries 1. For opening balances of assets at the branch Branch Account Dr. To (Individual) Branch Assets Account 2. For opening balances of libiliies at the branch ((ndividual) Branch Liabilities Account Dr. To Branch Account 5. For goods sent to branch Branch Account Dr. [At cost] To Goods Sent to Branch Account 4 For return of goods by branch to head office ‘Goods Sent to Branch Account Dr To Branch Account 5. For remiltance of cash/cheque/or-line transfer to branch for expenses (0.g., salaries, rent, pally expenses, etc.) Branch Account Dr. [Actual] To Cash/Bank Account 6. For cash/cheque received from branch (Cash sales plus collection from debtors) Cash/Bank Account Dr, [Actual including direct from debtors} To Branch Account 7. For Closing balances of assets’ at the branch ((ndividual) Branch Assets Account Dr. To Branch Account 8 For closing balances of fabilties’ at the branch Branch Account Dr. To Liabilities (Individual) Account 9. For closing goods sent to branch account ‘Goods Sent to Branch Account Dr. To Purchase Account [Trader] To Trading Account [Manufacturer] 10. For credit sales [No entry] 11. For normal loss [No entry] 12. For goods returned by customers [No ent)Financial Accounting - Il 7.5 18. For abnormal loss (8) Abnormal Loss Account Dr, [Total To Branch Account (©) General Profit and Loss Account Dr. [Loss] Insurance Claim Account Dr. [Claimy To Abnormal Loss Account [Total] In this context, it should be noted that Branch Account is prepared to know the correct profit of the ‘branch without being affected by any abnormal loss. 14. Pillerage One of the commonest feature of retail trade is “shoplifting” and this bas come to be regarded as a normal business loss — hence no entry is required for it, 15. Branch expenses paid by the branch [No entry] 16. Bad debts, discount allowed to debtors [No entry] Reasons for not passing any entry for 10, 12 and 14 have been discussed later in details. 17. For transferring profit or loss of the branch @ If profit: nch Account Dr. ‘To General Profit and Loss Account Gi) Iftoss: General Profit and Loss Account Dr. To Branch Account i should be noted thatthe closing balances of branch assets and liabilities are shown in the Balance ‘Sheet of the head office. The Branch Account appears as follows: Inthe books of the Head Office Dr. Branch Account cr. Date z Date Petals z Firat TaiTsan ¥ | By Baas be Cedi Detar ustnaing gens Pry Cash Dee. 31 | By Bak Ate Furure (cash les ropa Esperses Clete fom Dens ec. 3t | To oude Set rach Ae 8 Goots Set Branca Ac Bake: (Retsnot by Branch Ren Rate § Tax By Belaos ct Posy Cash ersanen) ‘Sock Totalanoe ve Detar rds Paty Cash Ousardng Excesos Fritee ‘To.Ganwal Prt & Loss Ae (Pro) Popa Exparses 2 Geral Profit Love Ne Lae)7.6 Branch Accounting ‘Some Typical Items The following items ate o be ignored while preparing Branch Account under this method: i) Credit sales; Sales returns; Bad debts; Discount allowed: et. (1) Depreciation of fixed asses, (i) Petty cash expenses paid by the branch, (iv) Shortage or surplus of stock, and (v) Profit or loss arising out of sale ofa fixed aset. The reasons are explained below: () Credit sates and other related matters (such as, sales retums, bad debts, discount allowed, etc) ‘The Branch Account is debited withthe opcning balance of debtors and credited with cash received from debiors and closing balance of debtors. Credit sale, sales returns, bad debs, discount allowed, et. are related to Debtors Account. For calculating closing debtors balance all these items have already been taken into consideration. Vherefore, these items ae 10 be ignored forthe preparation of Branch Account. (i) Depreciation on Fixed Assets The Branch Accountis debited with the opening balance of fixed assets and eredited with the closing balances of fixed asses after deducting depreciation. Depreciation is aulomal- ically accounted for and it should not be shown inthe Branch Account separately (il) Petty Cash Expenses paid by the Branch ‘The Branch Account is debited with the opening balance of petty cash and the amount of petty cash sent by the head office and is credited withthe closing pety cash For calculating closing petty cash, all expenses paid by the branch are taken into consideration, Therefor, it should be ignored for preparation of Branch Account. (iv) Shortage or Surplus of Stock ‘The Branch Account is debited with the opening balance of branch Stock and credited with ils closing balance, AL the time of calculating closing balance of branch stock, shor.agelsurphs is taken into consideration. Therefor, it shouldbe ignored for preparation of Branch Account. (v) ProfitLoss on Sale of a Fixed Asset If an assets sold for cash, the Branch Account i credited with the remilances, Ii is sold on credit, the Branch Account will be credited withthe Debtor forsale of asset ‘The profivloss on sale of asst is already included in the remittance/éebtors figure. Therefore, atthe time of preparing Branch Account, profi/oss on sale of asset should not be shown separately. (wi) Purchases by Branch The Branch Account is debited with the amount of remittance from head office. Therefore, any direct purchase by Branch should not be shown separately in the Branch Account, Mustration 1 From the following information relating tothe ‘Account inthe books of head office. aleutta Branch fr they ending 31st March, 2018, prepare the Branch ‘pening ales on 1.42017 Chace set Branch x ‘Sock at ranch a0 tne 0 Debs at Sanh rita Re Taxes Ss0 Pay can at Blanch 250 Paty Cam 2180 ‘coeds Seto Branch 630000. cleseg bates on 3.32018 osha e000 Seca Bran 2500 enh ote tom Dbl 525000 Dens a aren 120.000, (Godsend by Berek S000 ‘Paty Cosnat arch ‘00 Groatsabe 570900 Solution In the books of Head Office Dr. Calcutta Branch Account cr Ta Tana z Dat Para z TATAET | TOOT oT ar 3] By Goats Se ranch Ae RRA] 310 ‘Sek 7500 By Sank Dass 36000 Cash sae 139000 Paty Carn 750 aah ec rom Detar ss000 ‘ante art] To Gots Seto rach Ne 630900 Salone Taare aso ‘sre 22500 10.00 Font Taxes 3750 Posy Cash 00 Paty Caen 2380 To Gene prt Loss Ale 0.75 TERT TS “Totorial Note: Under metiod, dt ales an poy expense are ob gaolFinancial Accounting - Il_7.7 Mustration 2 From the following pariculars, prepare Branch Account inthe books ofthe head office assuming that he sales at branch are on eash basis. al figures arein&) Opering stack atte ranch $1,000 Expenses mstby asd oes Goode arte ranch fama Sal ‘9000 Coen saes 120000 Obaraxgenses "4000 Closing stock could not be acertsined butts known tha the branch usually sells at cost pls 20%, The branch manager is entitled fo a commission of 5% onthe profit of the branch before charging such commission 1CUB.Com (ons) ~ 20071 Solution In the books of the Head Office Dr. Branch Account cr Dae Para z Dae Pais z Toba a ayaaRRe ‘ce 000 (Cosh 120000 Te Goode Seto rach Ae ,000 ay Blinc ct Tabane ‘Sack te) zaca0 ‘aloes +000 ter expenses “ca ToBahnoe a6 Wagers carison (Nae 2) 0 0 oneal Pa 8 Lom Ae 5700 Tar er (1) Caloulation of Closing Stock x Openng sack ia Goode sre bach ate) nc00 Zia Loss Cost of uns se 1.20000 00 ‘oa000 aa (2) Prot before eammision i (20,000 + 20,600) ~€ (30,00 ~ 90,00 ~ 10,000 = 4,000) = € 6.000, Manager's commission is payable @ 5%. So commision 000x100 ~€ 300, Manages commission i sil payable, an, therefore, lily for te business athe endo th accounting pevod Mustration 3 X of Calutta has a branch at Bombay. Goods are supplied othe branch at cost. The expenses ofthe branch are pai fom CCaleuta andthe branch keeps a sles journal and the debtors ledger only, From the following information supplied bythe branch, prepare a Branch Account the books ofthe head office (all figutes in 2) peg sock (142017) 24000 Suey Debio 3.32018 a0 Chor ek 813201) “8000. Gootsmened fon sian rectal 41.000 Exposes psy 0B Branch ‘oano Casts 17502 Pitre o gods bythe yes 2000 Reso Fen Debi 7300 Solution In the books of the Head Office (Calcutta) Dr. Bombay Branch Account cr. Da Pa [ba Fata t a ia TBE ‘Soe 00 Cath sales ss00 Debts Nate) ‘060 eco tm Deblrs S700 218M 21] ToBark Ae (oxen) ‘ata 8y Bees ct: To Goes Seri earch Ne sam ‘Sack ‘8000 ToGarelPrft Lomas 500 Deters 80 ee oe “atorial Note: (1) in this problem, the opening bales of dobar has aot bon given, Memorandum Branch Deblers Account prepared below fr nding out the opening Blac of debar7.8 Branch Accounting or. Memorandum Branch Debtors Account or. Parco z Pare z “ToAnN BE pang Ta) 0 Pay Caer ca Toes (oat) 41000 | By Babnce ct 960 Te os (2) Pifrage of goods by the employees is very common to al businesses, So, shouldbe weated a5 a normal event Inte Branch -Accoum, plage is tobe ignored Mlustration 4 rom th following detail regarding West Coast Branch of Bombay Tradin the year 2017: (al figures in&) (Co, prepare a Branch Account in respect of ‘Schon 11.2017 2.900. Reta tha oice 44800 ‘Sockon 31122017 800 Baa dens 0 Dios on 11.2017 10.200 ices slowed 30 Deda on 31.72.2017 11500 Rouns fo coamere 3000, Goodson dung 207 4200, Expenses aby ea fic: Cosh le 25800 Slat and wages co Crest sabs 36000 Reiffon 112017 93132018) 5z0 Neral ee 2000 Suey xpensas 00 Solution In the books of Bombay Trading Co. Dr. West Coast Branch Account cr Dae Pancake z Dat Parr z Bir ind | Totamnenae TT Dos 3) By Gods Seo Branch Ae RRA] oo ‘tek 12000 By Bark: Dede 10900 Cath sae 5000 ec. 2t | Te Gongs SarttoBrach Ae 2a Caleconton bis Nets) | a0 sa0 Ta Banke 8ySaarao ie Sales Sages 8400 Stock 00 ont 5250 Doty 1500 Sandy expeces 3800 Popa Rot Noe 3) ‘080 Ta Gora Prot & Lae Ae 2090 Ea aa (2) Under tis method, norma oss, eo sles, sales oun, bal debi, dtcont allowed to debtor et art be ignored (2) Th attount of cach sve a debs eat give thes ben fot cu by preparing Mcnceadan Debio Acco follows br. Memorandum Branch Debtors Account cr. Parca e Pa = Toaaanasbe 100 | By BaD 7 Toe (reat) 36,00 | 6 Dasa lowes 310 By Rakes wars 3000 Byes atnesy fox) ms30 By Banca cit 11500 ox [oa (Gy Propakd Rent =e 52501153 —€ 1050 Mustration 5 ‘The bead office ofa company invoiees goods to its Shillong Branch at cost, who also purchases goods independently from local parties for which payments are made bythe head office. All the cash collected by the Branch is banked on the same ay to the credit ofthe head office and all expenses are directly pad by the head offic except fora Petty Cath Account ‘maintained by the branch for which periodical transfers are made from the bead office. From the following particulars, show the Branch Account as maintained inthe head office books, reflecting the branch profit forthe year ending 31.12.2017Financial Accounting - Il_7.9 Ingres Cash: 1.12017 2000, Raters tom Cusarers 3000 pres Cash 3.22017 1859 Gros solo Bane fom HO. siiga0 Sy Deron 1.42997 25,000 Trae em for pay ath npenses 2500 Secon 112047 Baste 500 “Tarared fom HO, 21000. Desoto cuter 200 Dec prtase by Branch 4000. Caohrecaed fom csomers 5000 Storage ofa 14000, rarchEporses ‘sico0 Goan Seb 4500). Siocon 12207 Crust Sales 130001 Tranfered tom Ho, 15000 Direc Puhases ‘000 ret pucraved oy Sanch 2000 Solution Inthe books of the Head Office Dr. Shillong Branch Account cr at Pater z Dat Fae z Tir en | Toba Boros 3 | By Ba Tmorstcash 2000 (Cash sas 45000 Surry nes 5000 Gash‘ecsiestomcustrars | 128000 Soot 2000 15000) 300 By Balance cl ee 3t | Bann Trprestcash ‘50 Prchases (ir) $5.00 Suny Stirs Note 1) aoe Barc eperses suo00 ‘Stok (13000 12000) 2r000 Pry ash 2500 ‘To Goode Set rach Ae 000 0 Genera ro oss Ae 22350 ZS esr Tutorial Note: Under dis mod, horage of sock, credit sales and rtuns by customer ro be gsc Working Note. or (1) Memorandum Branch Debtors Account or Paras z Patel z ToeaEeBE Zon [year TaD ToSder 1.30200 | By Bat cebss 00 By Dour comers 2000 By Rats Soo By Banoo ce 24000 TST [ss Mustration 6 XYZ Company is having its branch at Kolkata. Goods ae invoieed to the branch at 20% instructed to send all cash daily to head office. All expenses by the Branch Manager. From the following partic ares oft onsale, Branch has been id by head office except petty expenses which are met lars, prepare Branch Accouat inthe books of Head Office Par z Fae z SEK oR TSA DOD rs Pr, TOO [Daan Ane Das TH Suny eto en it g 210, “000 | exporses Patty Heed Oe Cash nHand aso tA, 2010, 0 | Rant 1800 fle Freon aot, 210, sn00 | Satay 320 Sood edo he Hed fies PA} 1.90200 | Satonry and Pista ‘0 Goode Rai Head Oren 7200 | rey Exons Pay to Barch 0 Goods Rae by Dabs 260 | Depraciten oe Prod on Brareh Fura Caen Raced rom Dans ago0 Jatt ga, cam Sabe s.ont00 | Soacon it Mach, 2011 ence Pros) zacoo rade Sles ‘000 TCA PCE) — May, 2077) Solution In the books of XYZ Company (H.0.) Kolkata Branch Account cr Pare z Dat TY z Todas bid ater 31 3y Sick Reson Ae (Nate 000 ‘Sock s0,g00 3y Ban Ne Ramtaces sso000 Suy Dobos ‘000 8 Geos Seta Branca Ae7.10_Branch Accounting cam inant 00 (Reureate HO) 200 OfeaFeoe ca 18 Goods Seto Branch (Note 2) st am By Saaoe itarenst | To Goats Sotto each Ae 10000 ‘Soot 23900 Toone SuyDabiors t ) ‘as et 100 Cash Nate) (200-800) ‘0 Salsy 3200 Farr (3000-390) 200 Sisto & Pinang ‘to To Ser Rarewe Ne N93) 500 Ta Genel Prot ana Loss Ne 24100 Taro aT ‘Working Notes: (1) Loading on opening stock ~ 20% of € 30,000 = & 6,000, @) Loading on goods sent = 20% (& 1,60,000 - 2,000) = 31,600, @) Loading on closing stock = 20% of & 28,000 = € 5,600. Dr. (4) Memorandum Debtors Account cr. Tae Paras = Da Pare z Ta2T | ToeaaeDe TED [STRAIT | Desc Awe w staao | Tosaleve 0,000 5) Sales Roun Ne 0 By Saree 900 By Slaoe (Salar fu) ‘80 Tae 0 Mustration 7 From the following particulars relating to Patisla ranch fr the year ending 31.12.2017, prepare Branch Account inthe books of head office and show how the relevant items will appear in the head office Balance Shoot as on that date Balacas on 11.2017 Cash paid debs deco hat oie 2900 ‘Sock 40900. Doin aed 1100 Dobe 14.900. Cae sont tar expen Paty cash 4500 Rant ® 12000 Sabres: 5400 Pay com & 4000 Fumie 12000, sranes fm 142017 9 31.3.2018) 100 Prop reinavance 1180 Gees etaredby he baer 000 Dusting satires 2100. Gants euros th eles 00 ods sn iba 2000 Sledon 31.12.2017 8000 Cesnale 330000 ety sxpenses pay ha bran 72850 Cresteabs {8a00 Prove depreciton onkein @ 10% pa Coxhoe tom deblore 1.35000. Less sot y fre 00 Solution Inthe books of the Head Office Dr, Patiala Branch Account cr. Tae Fama z Dat Paras z Bir nd | Tota TT en. | By Banca ‘ek 40900 ‘Cussarcing slates 200 Dede 14900] bee 3t fey BarkAe Paty ash 1500 Cash ae Fura 200 Clason om Detar Prope fe insurance 180 Dract pare: to HO. oe 2 | ta oase Sertich Ae zaciaea 8 Goods sere Sanches) TaBank Ne By Lose sock bye No 5) ent 12000 By Sabros 6 Saas ‘400 ‘Sook Paty cash 400 Dobie Natt) Iswance 1800 Fare Nate 3) Toon Pros & Lose Ae 20900 Psy ash oe 2 Prop rntrance (Nake) 0 aeFinan jal Accounting - 7.11 Balance Sheet of Head Office (Extract) ‘As at 31st December, 2017 Tester z Tee z Sach Pa Tra [Bana Fare ay Barc Stok ed Branch Dados 51900 Branch Pty cash 2550 Branch Prepaid Fe uence a0 ‘Working Notes Dr (1) Memorandum Branch Debtors Account or Pater z Patel z Tote “TE [By Bank TS» 72,60) Tarbab ToSaes 183000 | By Oss lowes +10 By Res 7000 By Bane cs 1900 Ta as Dr (@)Branch Petty Cash Account or Paar z Paras z Tobaaneet TED [By Paty mares 7 Toba 400 Joy cannes 2650 35 a (3) Value of frniture ae dopreciaon wil be= 12,000 1.200 =¥ 103800 (6g) Prepaid insurance © 1,600/12x3~ 400. (8) The rich Accounts prepare o know he comes prof f the branch without bing fected by any sbaomal os, Hes, goods lost ty Tiree am anormal event Therlore, abnormal sto Be debited to Gener! Profit and Lose Avot an redid 0 anch Mustration 8 ‘A company with its head office at Bombay has a branch at Caleta, The branch receives all goods from head of also remits cash forall expenses. Sales are made by the branch on credit as well as for cash. Total sales by the branch forthe year ending 313.2018 amounted to & 560,000 out of which 20 following futher information s relevant 114.2017: Stock — € 25,000; Debtors — € 60,000; Cash —¢ 120 31.3.2018: Stock — 36,000; Debtors —t 48,000; Cash —& 180, Expenses incured by the branch: Selaries 236,000, Rent — 12,000; Pety expenses —2 5,600, All sales are made by the branch at cost plus 25% ‘You ae required to prepare the Caleuta Brasch Account inthe books ofthe head ofice fr the year ended 3st March, 2018, ee, who is cash sles. The Solution Inthe books of the Head Office (Bombay) Dr. ‘Calcutta Branch Account cr Date Paras z Date Pats z THAT apt | Tosa FT | 5 Bark Ne Yomtaces ease ‘Stock 25000 (Cash sales Noe 1) 2000 Detar a.o00 Catecten tomate Notes} | 459000 Psy cash m0 8 Blanes ct 2or Max 31] To Goode Sento Bach Ae (Nai2) | 489000 ‘Sock 8000 0 Bark A (eiiances for expenses Debs ‘4000 Sado 4,900 Paty cas 180 Rent ‘2.000 Pty expanses Neto) 560 TeGaneal Prt & Los Ae 500 eae ae7.12. Branch Accounting Working Notes: Ty chad reat aor 7] erect arncr z alle a ee aa Lea: Cat ae (20% ot 5.8.00) 1120 | tax: Press 56000) ane ret ste ZEEE] cost es em ad sng sek am Les: peng sock Shoo ond set Branch am or (@) Memorandum Branch Debtors Account ES Fara = EE = ToT Son [By BRITE Tao) TBIDDF To cred aes a1) 4agot0 | Bybamnen os ‘00 55900 8 or (4) Branch Petty Cash Account ce Faria Fars z TaBaRR Ta | ByPey enone a banc At vmtaces pee, -talnengg) | __ S860 | Baten cs 0 57 [oer Invoice Price Method : Sometimes, the head oflice may prefer to send goods to the branch ats higher price than cost (termed as invoice price). Method of sending goods at invoice price is excellent from the point of view of stock control, As the goods are invoiced at selling price, the head office ean dictate pricing policy to its branches, as well as save work at the branch because prices have already been decided. Invoicing at selling price is generally done where goods are of standard type, pre-packed and unlikely to luctuate in price. Where head office has little control over selling prices (as for example, with perishable goods like fruits, fish, milk, ct.) the most suitable method is that of invoicing at cost price. In addition, goods may be invoiced at selling price to keep the margin of profita secret from the branch manager. ‘The method of preparation of Branch Account is the same as in the cost price method, excepting that all joumal entries relating to the goods (opening stock, goods sent to branch, goods retumed to head office and closing stock) are made at invoice price and proper adjustments for loading (difference between cost price and invoice price) are made atthe end of the accounting period by passing some additional entries. Journal Entries 1. For ‘opening balances of assets' at the branch Branch Account Dr To (Individual) Branch Assets Account [Opening stock at invoice price) 2. For ‘opening balances of liabilities’ at the branch (individual) Branch Liabilities Account Dr. To Branch Account 3. For loading on opening stock Stock Reserve Account Dr. [Loading on opening stock] To Branch Account 4. For goods sent to branch Branch Account Dr. [Invoice price] To Goods Sent to Branch Account 5. For return of goods by branch to head office ‘Goods Sent to Branch Account Dr. [Invoice price] To Branch AccountFinancial Accounting - Il 7.13 6. For loading (Net) on goods sent to branch Goods Sent to Branch Account Dr. To Branch Account [Loading] 7, For remittance of cashicheque/ to branch for expenses (e.g., salaries, rent, petty expenses, etc.) Branch Accoun Dr. To Cash/Bank Account [Actual] 15 For cash/cheque received from branch (cash sales plus collection from debtors) CashiBank Account Dr. To Branch Account [Actual including direct from debtors} 3 For ‘losing balances of assets’ at the branch (individual) Branch Assets Account Dr. To Branch Account [Closing stock at invoice price only] 10. For ‘losing balances of iabilties” at the branch Branch Account Dr. To Branch Liabilities (Individually) Account 11. For closing goods sent fo branch account Goods Sent to Branch Account Dr. To Purchases Account To Trading Account 12. For loading on closing stock Branch Accoun To Stock Reserve Account Dr. Trader] Manufacturers) [Loading on closing stock 18. For credit sales, normal loss, normal piferage, goods returned by customers, etc. [No entry] 14, For abnormal loss (a) Abnormal Loss Account Dr. To Branch Account (b) Branch Account Dr. To Abnormal Loss Account (© Bank Account Dr. General Profit & Loss Account Dr. To Abnormal Loss Account Lnvoice price] [Loading on abnormal loss] [Insurance claim received] [Loss] 15. Normal pilferage, branch expenses paid by the branch, bad debis, discount allowed to debtors, etc. [No entry — See page 2.6 for reasons] 16. For transferring profit or ass of the branch @ If profit: Branch Account Dr. To General Profit and Loss Account Gi) Iftoss: General Profit and Loss Account Dr. To Branch Account Mustration 9 Relax Ld, supply goods ois New Delhi branch at cox plus 25%, All ash sales al branch sm the fllowing particulars, show by Debtors System the c year ended December 31,2017 : (all figures in) office, and the later di result ofthe branch operations fr ely pays all the branch expense, Pr del remited tothe head Sek abrane 13.207 ino pie) 3009 Cash pay HO. fren reas a0 Goods sre arch (rota pi) 2000 Cask aad ay HO. fer suey exersos 2.600 Reniances tome ch ‘.o00 Raters tone ranch feroce re) 180 Gash padby #0. eles &wapes 190). Soest branch on 3122057 imo pce) gad7.14 Branch Accounting Solution In the books of the Relax Ltd. (H.0.) br. New Delhi Branch Account cr. Tae Paras e Date Paneer z BAT nT | T9eRREBE TOT Des i] By Sane Re Ress) Be Seek 3000 5y Shek Resor Ae (le 1) 00 oe 3t | To ont Sot inBranch Ae 24900 By Goods Set Brareh A Ta Bonk iReurs) “0 Salas & wager 1900 .2y Goods Senta rach (Nate 2) arm Ronee 0 By Banos ce Si expenses 2900 ‘So ‘00 Ta StecRasere lo Net 3) 1800 Ta Gana Prot Lose Ae 5420 esa ER ‘Working Notes Uy Loading on opening tock. Lindi it 25%0n sot tthe gven dts are lated to invoice pie. That cost ix 100, the voice pice wil be & (100 +25) £125. Hence, lading on Invoice price 25/125 1/5 or 20% Therters, lading on opening sock wil be 3,000 1S (2) Loading on Goods seat Total god sent, € 24,00. Goods retumed by branch at invoice pice™€ 150 Te ating et goods sot wil be 25880 1/5 £4,770 (0) Loading om eoting stock ~ ©8000 1/5 ~€ 1,600 Mustration 10 '.P, who eatried on retail business, opened a braach X om 1.1,2018 where all sales were on credit basis, A goods ied by the branch were supplied from the head oie and were invoiced tothe branch at 10% above cost. The fllowing ‘were the tansoetions (ll Figures are in ®) Jan2018 Fep20%8 Mar 28 ocd sr ttranch purchase ace) ‘ooo "soan0 000 ‘abs as show byte bane mor epot sooo 42000 $5,000 Cash retard om debi anders ad oe moo Stan 35000 aur nea ofc mle pce beset) nao 600200 ‘The stock of goods held by the branch on 31.3.2018 amounted to & $3,400 at invoice price ta branch, Record these ‘sansactions inthe head office books, showing balances as on 31.3.2018 and the branch gross profit forthe thee months ended os tht date. All working should be par of your answer Solution In the books of S.P. (H.0.) Dr. X Branch Account cr Ta Paras 7 Date Fae z “Bar | To Gos SarToSanch AGT] — TASH | 26 Wr. 1] By Goode Son Barc A ROTA, a Ta Sek Reser le ta 3) 355 5y Saree 1.98000, To Geneal Pra Loss Ne 37383 By Goods Set rach (Nate 2) Leading ant good se, mote by Saas ee 400 000 aT Zarate Dr ‘Goods Sent to Branch Account cr Ta Paras = Dat z ‘BFE WaET | TORE Ne ers] 200 | Be Mar] By Bare TS Taxanch Ne eal) 8 TaPchasee Ae 146.2 1500 TS (0) Total goods sent ~ £40,000 | £ 0,000 £60,000 150,000. Loading 10% of € 150,00 ~€ 15,000 Invoice price of ods {) Net loading on goods sent = 1/11 € (165,000 ~ 4,200) =€ 14,518. (8) Loading on closing stock 1/1 X€S3,400=€ 4855Financial Accounting - Il 71S br. (4) Memorandum Branch Debtors Account or. Tae Para z Dat Pars 7.12018 | Toba =| aaa [yawns 3132018 | Teale 1.35000 | 3132016 [By Beans os T5007 Mlustration 11 ‘Me. X has a branch in Calcutta. He invoices goods to the branch at selling price which is cost plus 334/%. From the following particulars prepare Branch Account and Goods Sent Branch Account in the books of Mr. X (all figures in ®) Sk ont Janay 2017 vere) 15000, Deca alowed estore a0 Debs on 5 Jara 2017 11400. Bod eter a0 Goofs sero branch tie pce 17,600 Cheque set oben ae aos 31900 Satis 5000 oct sas 37400 Suny expnses 3700 ae rected om debs 4,000 stoson 3s Decenbe 2017 vie peo) 13400 MCW ALInter) — Adapel} Solution Inthe books of Mr. x (H.0.) Dr. Calcutta Branch Account cr. Da Pa z Dat Pata z TAT nT | TOES TOV 3 5 BRA ‘Sook 15900 ‘ashe 1000 Deter 1400 Cash rened tom Debi ‘oo ee 31 | To oad Seto rach Ae 7.900 By ck Rese (Nae 2), 3750 ToBarkne 8 Geode Sat Branzy Ne Nae 3) 16750 ‘aloes 00 By Blancs ct Surry exposes 100 ‘Sock 13400 Testacksere Ale le §) 3x0 Debs eet 1) 3250 TaGonealPrt & Loe Ae 0 TST arr Dr. ‘Goods Sent to Branch Account cr Dae Pare z Dat Faia z "HAT vB] To Cae Baek Ae oor) Taya |? | yaaa anche ar 7) ToPuraces Ne (Nol) 3250 T7 loam ‘Working Notes: or (1) Memorandum Branch Debtors Account cr. Pater 7 Pata z Totameabe "TAD [By Ds alowed WH ToSdes ees 7400 Jey Be aes 20 By Bark enc00 By Baten cs 8280 TE aa {@) Landing on Opening Stock nang 3" 84 costo the given data ates to inepice rice. Ths, costs 100, the invoie rice wil be &(100-+33"%5) ore 158, Hees, loading on vais pret = 384/188) 18 or 25% {G) Londing on goods sent to Branch ~€ 67,000 14 ~ 16,150, (8) Loading on closing stack = £13400 1/8 23,350, Mlustration 12 ‘Ahead office in Patna has two branches at Madras and Delhi. Goods are consigned to them at loaded figures of 10% and 207% on cost respectively. During the year, the invoices to the branches are € 44,000 and € 60,00 respectively. Include in the item € 4,000 are invoices for goods costing € 12,000 and invoices to the Madras branch at€ 13,200 "which should have been invoioed to the Delhi branch. Sales areal for cash, with that of Madras branch, being 22/000, fd of Dethi branch 850,400, Iemay be assumed that the closing stocks ae cores. ‘You ate required o prepare: i) Madsas Branch Account, and (i) Delhi Bratch Account716 Branch Accounting Solution In the books of the Head Office (Patns Dr. ‘Branch Account cr Dae Pane amas [beni J Dae Pane cas [Oa Fo Goo Serio Banen NE Ne TH | BORN | THAT Wy Gow Seeto rach NE NORA | ZA] Tao To took Reene Ae aa} 000 By Bark (als) zz000 | sano To Proft Loss Ne zoaca| 400 By Baloce os: Stock Note 3) ‘ae00 | 24000 Ba | waco 0 | sano ‘Working Notes Net good sent to Madras branch =€ 44,000 —€ 15,200 ~& 30,800, Net goods sent to Delhi ranch = € 60,000 = 12.000 x 120100) =¥ 6,000 ~€ 14400 #74400. (2) Loading on goods seat = Mads: U/L x 30,500 =€2800; Det: V6 x 74,400 = 12,400, (8) Value of Closing Stock at Invoice Price Keres] On ao pte of ond ar oan 7e400 Las: Coes sls zeq00 | sno Tae | Fe Mustration 13 ‘Lid. maintains a branch at Calcutta to which it sends goods at cost plus 25%. Calcutta branch sells goods both in cash and on credit. All collections and cash sales are directly deposited to head office Bank Account and all expenses are paid by the head ofice ditetly, From the following information, prepare Caleutt Branch Account in the books of head office: Balaens on 142017 Cosh sles 000 Branch ck tio pow 50,900 Bad ens ‘00 anc toe 0.900 Discount stowed ‘00 “Transat during th yea: ‘nara of ued ato pie ‘00 Goes sar ibranch alco 140.000. Chacue sont had fies branch Goods retuned by ranch ance pre 10,900 Rae: € 40 Sak 600 Pty eerses: £2000 Goods retuned by debi trench 3000 Sloe 31.2216 Cros sabe 120.00 Deol £450, tek ato pcs 4000, uxtandrg ert: 00 Solution In the books of S. Ltd Dr. Calcutta Branch Account cr Tae Fama z Dat Para z TTA T | TORSRCORT oT ar 31] By Seer Ne te Saar ‘Sek 0900 foods Sel rach Ae Raker) 000 Desos pac 15} Goods Set ran le Nab 3) S00 ‘artenat| To Goats Serie Banh Ne(Note2) | 178000, By Barca TaBankne ae sae s.000 Rent 400 Caledon tom Debs Notes} | 1.7000 Saas ca ‘2 Atramal ate 8) ‘oc0 ty expenses 200 5} Saas Ta Abnormal vers We (Not) ‘ato Dobe 45000 Tak Reserve Ne 0 Stet ‘oon TaBabnce a ‘Outtandrg Ret 910 To Gane Prot Lats Ne 11400 ZED ZO Working Noe: (1) Loading on opening tock oading is 25% on cost but the given data are reltedo invoice pce. Ths, fost 100, te invoice prc willbe (100+ 25)=% 125. Hence, odin invoie pics 25/28 = 1/5 120% Thee odin on pening sock ~ 30,000 15 = © 6.000. (2) Invoice prices of goods sent € 180,00» 25% of € 140,000 8 140,000 =€ 35,000 8 1,75,00, 18) Londing on net goods sent Total goods sent, 1.75000, Goods etrned by branch t invoice prise, € 10,00, The lonng on at goods sem 1/5 x 5,000" €35,000Financial Accounting - 17.17 or (4) Memorandum Branch Debtors Account or Paar z Pata z Toaamebe 7,5 [By Ras 350 ToSaes ess 1.20000 | By Bae dees Zo By Dour awe So By Bark (Babncng au) oro By Saace od TT [rarer (6) Under his meted, ced sles, sales uns, bad dei, discount allowed a debe, os ae to be igoned (6) Branch Accounts prepared o know te conc profit ofthe branch without being ated by ay abnormal los. Hee, abnormal Joss at invoice pice =€ 8000 To caleulte const prot, € 8.000 is tobe ceded to Branch Account an loading o such ss (of 1,60 ist be debited to Branch Acca. The cot of goods oss ® 0002 1,600 ~€ 6 et be charged to Genel roi Stock and Debtors System Stock and Debtors System is generally used when the goods are sent to the branch at an invoice price and the size of the branch is large. Under this system, the head office maintains a few special accounts to exercise ‘greater control over the branch stack and other related expenses, These accounts uswally are: (Branch Stock Account; Gi) Branch Debtors Account; ii) Goods Sent to Branch Account; (Gv) Branch Adjustment Account; (¥) Branch Cash Account; (vi) Branch Expenses Account, (vil) Branch Profit and Loss Account; and (viii) Branch Fixed Assets Account The nature and functions of different accounts are given below: Branch Stock Account : Branch Stock Account is a practical means of controlling stock at branch This account records the transactions in regard to the stock in the branch at invoice price. The debit side ofthis account records the inflow of stock into the branch and credit side records its outflow from the branch, ‘The Branch Stack Account is opened with the opening value of stock at branch and in transit (at invoice price) and debited with the invoice value of goods sent to branch and goods returned by the customers. This account is credited with the sales (cash and credit) and goods returned to the head office (at invoice price). Ultimately, this account is credited with the closing stock of the branch at invoice price. Sometimes, it is also credited with goods in transit at the end ofthe year (at invoice price), Since this account is a statement showing the reconciliation of stock, both the sides should tally and, in effect, this account cannot have any balance. But, this is only a theoretical view. In practice, there are often slight differences — usually deficiencies. For example, itis practically impossible to weigh up exactly 100 separate kg, of utter from one quintal butter slab, In some cases, there may be a surplus for different reasons such as, sale of goods above invoice price and absorption of moisture (in case of sugar, fertiliser, ete.) In practice, its usual to make certain allowances in respect of such unavoidable differences. If i s more than normal allowance, enquiries should be made as tothe causes of the difference. Shortage/deficiency is recorded on the creit side and surplus is recorded on the debit side. Important features of Branch Stock Account are as under: (._Itcontrols branch stock, Gi) It is maintained at invoice price. (Gi) Actual stock with the branch is shown as the balance inthis aecount, The ruling of the Branch Stock Account is given below: Dr Branch Stock Account cr a Pea z ai Pete TAT Je | To Baan BOA Gs Hy come Seo ren fe ‘arch ‘Relars oo ingame 8y Bon Ne ash ses718 Branch Accounting es 3 | To Gone Serta Bach We Taanc Deir Ae iRetunec by isonen) Dee st | TosupbsinSat sit any 2rr8an.+ | ToBamnee be 2branch it 2ySrnch Deir Al (rt sc} 8} Atramal oes ty He Ne By Shotage nS any By Bares 6 Branch Debtors Account Branch Debtors Account is maintained when the branch is allowed to sell goods ‘on credit. It is used to exercise control over branch debtors. This account records transactions with the branch debtors and is prepared like any Sundry Debtors Account, Opening balance of branch debtors is brought down, ‘on the debit side ofthis account and this account is debited with credit sales atthe branch, It ig credited with the cash received, discount allowed, sales returns, bad represents the closing balance of debtors. debts, bills receivable, ete, The balance of this account Dr. Branch Debtors Account cr. Tae Fama z Dat Paras z Fir n,7 | Tobamneone HT Des) By Bae Ne Cecon Dee 31 | To Beno Sook Ae (Ce sles) By Branch Soars le Decoun alot Bod sos By Branch lock Ne Rete by Balana ee ayrasan.+ [ToBatnce be Goods Sent to Branch Account : Goods Sent to Branch Account is eredited with the invoice price of goods sent othe branch by the bead office and transferred from other branches and debited with the invoice price of the goods retumed/transferred by the branch. This account is also debited with loading on net goods sent to the branch, The balancing figure on the debit si is adjusted against Purchase'Trading Account by the e represents the cost of the net goods sent to the branch which hhcad office, This account cannot have any opening or closing balance Dr. Goods Sent to Branch Account cr a Paraan z at Pare z AT DEST | TORR SETA ARH] TOT Dee By Bench SR Tadane Sie Ae rene) By Branch Steck A Tasty Taare Adjuster Ae (oad) Ta Prcanvesiacrg Ae Fara ada — Parone Resa na aa manaact — dng Aaa Had ioe Bon Branch Cash Account: Branch Cash Account is prepared with a view to exercise control aver the branch cash, This account is gencrally opened where the branc! ‘his allowed to hold cash received from debtors and use it for branch expenses and remit the balance to head office after certain interval, Generally for big branch a separate Cash Account is maintained. ‘This account is debited with the opening balance of cash, the cash remitted by the head office or the branches and the cash collected from the debtors. It is edited with the branch expenses and amount remitted to head office or other branches. The bal 1c of this account represents the elosing eash lying with the branch, br. Branch Cash Account cr. Da Parcs e Dat Paes z BAT Ian,T | TOBaTEBE TOT Dee | By SEE Reares BOT Doe 3 | To Bank Ale Reritanos) 5y Srrch Eanes le Ta Bank le Tarr fo oa trarh By Bare Ne Taner oe bar By salanceFinancial Accounting - IL 7.19 Branch Expenses Account: Branch Expenses Account records all branch expenses in cash. In addition, this account is debited with the items like bad debts, discount allowed, depreciation on branch fixed assets, ‘etc, The balance of this account is transferred to Bratch Profit and Loss Account and, thereby closed. (When no separate Branch Profit and Loss Account is opened, itis closed by transferring to "Branch Adjustment Account") Dr. Branch Expenses Account cr. Date Parr z Dat Petals z HiT bac) ToBsaeh Ca Ne ea) BHT Dos HT) By Bare POM AL Branch Ast Al (Depredaton) ToBneh Deis Ne Basco Decount ated Branch (Stock) Adjustment Account : Branch Adjustment Account is prepared with a view to ascertain the gross profit of the branch. This account summarises the profit "loading" on all transactions, This account is credited with the "stock reserve" on opening stock and loading on net goods sent to branch. It is credited withthe loading on surplus in stock. This account is debited with the loading on shortage- in-stock; spoilage, pilferage, thef, loss by fire, loss in transit and "stock reserve" on closing stock. The balance of this account is ‘ransferred to Branch Profit and Loss Account. Dr. Branch (Stock) Adjustment Account cr Dae Para z Da Pata z "BT DeEST| To Sarge Siok Ne Ag TTD 3] By Sa Rane Ae Lass by Fe Al Laadng) (Loan en apering tc Loven eat Ae ar) 8) Goose Sent Bran A Last Tete Lea Usdin on nt goo en Plage Ae (Lead) By Supls nlx Ae Sek esene Ne Teng er spl) (Leading on desig slot) By Gross Loss| ToGon Pritoe “Tay be shawn 6 By Balance bd aa To Balnoe ca Branch Profit and Loss Account : Branch Profit and Loss Account is prepared to ascertain the net profit ‘or loss ofthe branch. This account is credited with the gross profit as ascertained from the Branch Adjustment ‘Account and cost of surplus in stock. This account is debited with the branch expenses and cast of shortage in stock, pilferage, theft, ete, Ifthe credit side is more it represents net profit, and it is net loss when the debit side is more, ‘The students should note thatthe branch profit should not be affected by the abnormal events beyond the control ofthe branch such as loss by fie, oss in transit et. The cost ofsuch goods should be charged 10 General Profit and Loss Account instead of Branch Profit and Loss Account to caleulae the correct profit ofthe branch. Uf the nature of the loss is normal (such as spoilage plferage, theft, etc) and if it cam be identified with the branch, the cost of such goods should be charged to Branch Profit and Loss Aecount. Dr. Branch Profit and Loss Account cr. Date Pane z Dat Faas z ‘HiT bac ToRraeh Sonees le BiTDes 3) By Goss Pas ToLossby Tat Ne Cos, By Supls lok Ne Cox ToShrage Stack (Cox) Pieage Ne (Cos) Generac 8 Love Ale7.20. Branch Accounting ‘Sometimes, a separate Branch Profit and Loss Account is not opened. In that situation, the Branch Adjustment Account will show net profiloss of the branch. In this case, branch expenses, pilferage (cost ‘+ loading), theft (cost + loading), and shortage instock (cost + loading) are charged to Branch Adjustment Account. Similarly, surplus in stock (cost + loading) is credited to Branch Adjustment Account. Branch Fived Assets Aecount : ae head office may maintain separate asset accounts for each fixed asst. ‘This account is debited withthe opening Value of asset and purchase ofan ase, if any. This account is eredited with the deprecation provided onthe asset, The balance of he account represents th closing value ofthe asset Journal Entries 1. For goods sent to branch Branch Stock Account Dr. [Invoie Pree] To Goods Sent to Branch Account 2. For goods retumed by branch to head office ‘Goods Seat to Brauch Account Dr; [Iavoiee Price] To Branch Stock Account 5. For goods received from other branches Branch Stock Account Dr, [Tnvoice Price] To Goods Sent to Branch Account {For goods transferred to other branches on advice of head office ‘Goods Sent to Branch Account Dr. [Invoice Price] To Branch Stock Account 5 For cash sales Bank Account Dr. [Actual sales proceeds} To Branch Stock Account 5 For credit salos Branch Debtors Account Dr To Branch Stock Account 7. Forbils accepted by Branch Debtors Bills Receivable Account Dr To Branch Debtors Account 5. For cash collected trom debtors Bank Account De To Branch Debtors Account 3. For bad debts, discount allowed, etc ‘Branch Expenses Account Dr To Branch Debtors Account 170. For depreciation on branch fixed assets Branch Expenses Accoust Dr To Branch Fixed Assets Account 1. For branch expenses incurred in cash Branch Expenses Account Dr. To Cash/Bank Account 12 For transferring branch expenses to Branch Profit and Loss Account/Branch Adjustment Account Branch Profit and Loss Account Dr Or, Branch Adjustment Account Dr. To Branch Expenses AccountFinancial Accounting - I 7.21 13. For shortage in stock/pilferage/thott () Shortage in Stock/Pilferage/Theft Account Dr. [Invoice Price] To Branch Stock Account (Gi) Branch Adjustment Account Dr. [Loading] Branch Profit and Loss Account Dr. [Cost] To Shortage in Stock/Pilferage/Theft Account 14. For oss by firefoss in transit (i) Accidental Loss Account Dr. [Invoice Price] To Branch Stock Account Gi) Branch Adjustment Account Dr. [Loading] Bank Account (insurance claim received) Dr. Insurance Company (claim yet to receive) Dr. General Profit and Loss Account Dr. [Loss] To Accidental Loss Account 15. For loading on opening stock including stack in transit at the beginning Stock Reserve Account Dr. [Loading] To Branch Adjustment Account 16. For loading on net goods sent Goods Sent io Branch Account Dr. [Loading] To Branch Adjustment Account 17. For loading on closing stock including stockin-transit at the end Branch Adjustment Account Dr. [Loading] To Stock Reserve Account [Un the Balance Sheet of head office, the Stock Reserve is shown as a deduction fom branch stock atthe end] 18. For transferring gross profit (9 Branch Adjustment Account Dr. To Gross Profit Account (ii) Gross Profit Account Dr. To Branch Prot 19. For transferring net proft of the branch Branch Profit and Loss Account Dr. To General Profit and Lass Account (For net loss, reverse entry) 20. For closing Goods Sent to Branch Account and Loss Account Goods Sent to Branch Account Dr. To Purchases Account Trader] To Trading Account Manufacturer] ‘Treatment of Some Typical Items Normal loss : No treatment is required even ifits given specifically inthe examination problem, However, for caleulating Branch Closing Stock (when itis not given) normal loss is credited to Branch Stock Account at invoice price. Normal Loss Account is closed by debiting to Branch Adjustment Account Pilferage/Theft: Wn retail trade, pilferage or shoplifting is very common and this has come to be regarded as anormal business loss. The loading of such goods is charged to Branch Adjustment Account and cost is charged to Branch Profit and Loss Accoun’ ‘Shortage in stock : Shortage in stock may be due to spoilage, leakage, sales in small quantity, ee. Loading ‘on shortage in stock should be charged to Branch Adjustment Account and cost of such goods should be charged to Branch Profit and Loss Account, ‘Surplus in stock : Loading on surplus in stock is credited to Branch Adjustment Account and cost of such ‘goods is credited to Branch Profit and Loss Account.7.22 Branch Accounting Loss by fire/loss-in-transit : Loading on goods lost by firelin-transit should be charged to Branch Adjustment Account and the cost of such goods should be charged to General Profit and Loss Account. ‘Students should note that the branch profit should notbe affected by the abnormal tems. Some authors proferto charge the cost ofthe goods lst by fre to Branch Profitand Loss Account. But, in our opinion, this practice should not be encouraged because heavy loss due to fie by converting branch profit into ‘ranch loss may mislead the management at the time of decision-making. Inter-branch transfer of goods : Sometimes goods may be transferred by one branch to another branch. At the time of making entry for transferring branch, it should be treated asa transfer to head office (though the goods is actually transferred toa particular branch). Similarly, for receiving branch it will be treated as received from head office. For the transferring branch, the entry will bet ‘Goods Sent to Branch Account Dr. [Invoice Price] To Branch Stock Account For the receiving branch, the entry will be: Branch Stock Account Dr. [Invoice Price] To Goods Sent to Branch Account Mustration 14 (On Ist January, 2017 goods costing € 132,000 were invoiced by Madras head office fo itsnew branch at Delhi and charged at selling price to produce a eros profi of 25% onthe selling pice "Atihe end ofthe yea, the retum from Delhi Branch owed that the credit sales were & $0,000, ‘Goods invoiced a € 2,000 to Delhi branch have been returmed to Madkas head oflice The closing stock at Deli branch was © 24,000 at selling pice. Record the above transactions in the (0) Delhi Branch Stock Account, (i). Goods Sent fo Delhi Branch Account; (il) Dethi Branch Adjastment Aecout; and, liv) Delhi Branch Debtors Account in the head ofice book and close the said accounts on 3st December, 2017, Solution In the books of the Head Office, Madras, Dr. Delhi Branch Stock Account cr Da Paras @ Dat Farr z ‘BAT aa To Gane Saree RE TTSHOT | OW Des i] By Goats Seto Dah Br AE Raa) 2000 By Branch Oct ls (creat sas) 130.000 By Baan 6 ‘400 1760 17.000 Dr. ‘Goods Sent to Dethi Branch Account Da Parcane z Dat z "Bi es] To Dan Bane Sok He Rea) 000 [207 Dec 3H] By Dah Branch Sock Ne Tatoo TaDah Brann Adusinert Aine 1} | 43500 ToPrcases Ae rastare 130300 17600 To Dr. Delhi Branch Debtors Account cr Oa Panels z Date Parr z Bi es] ToDo Ba Soak Ne TORT | OV bo | By BARTS Dr. Delhi Branch Adjustment Account Oa Parone z Dat arise ‘Bi ae 3] To Soak Rare Ae Nee) 15060 [ BT Dae 3] By Gan Sar Da ri AE NT Ta Genel Pit Loss Ae 1500 500 BsFinancial Accounting - Il 7.23, Working Notes (a) Total goods seat to Dei branch at sling price is® 1.76.00. Goods retumed o head oie aseling pice i € 2,000. Net goods ct ie €1,74,000 Loading 25% on selling price ~ 25% of€ 174000 = € 4.50, (2) Vale of closing took a eling price ~® 24000 Losing on losing sock =25% of 24000 = 6,00, (3) When no separate Branch Prof and Lovs Account x prepare the Branch Adsiment Account wil discle the branch roi Mustration 15 ‘On January 1, 2017, the goods invoiced by Calcutta head office ofa trader to its Madras branch were € 48,000 at selling price, being 334/ 9 on cost price. Forsix months ending June 30, 2017 the branch return showed tht the credit sales were £20,200. The goods invoiced at 2,000 were returned by the branch to the head office. The closing stock at Madras branch ‘on June 30, 2017 was t 16,800 at slling price. Record the above transactions, showing the Madras Branch Stock Account, Madras Branch Adjustment Account and ‘the Goods Sento Branch Account in Calousta head office books and balance them on June 30, 2017, Solution In the books of the Head Office, Calcutta Dr Madras Branch Stock Account. cr Da Paras z Date Pate = ‘HiT an 1 | To Gas Sere Branch "0 [Tun 3 By Gua Sts anc IS RIMS) 700 Bj BarchDebios Ae vag 3) Bdance cit 6200 satyt | Tosco tit a Dr Madras Branch Adjustment Account cr. Da Para z Dat Peers z “Bir ana] To Sak Rese eo “THRO | BOT wre By Goode Seto Bren Me eT Tao Torch rot Love le 1a FS aE Dr Goods Sent to Branch Account cr. Dai Parca z Dat Pate z Bi anes] Tose Se G00 [BOTT sanT [By BareN SRA a ToBanch Adjust: Ne(Netlesdng) | 1500 ‘ToPuchases Ae Tanse, 50 R00 Tae ‘Working Notes (0) Loading on goods sen (ne): Loding a 33!) on cost ut he given dats ae related to noice pros. Thus, fot ie 10, he Invoice price mlb @ 100 * 335) °& 1334s Hence loading on invoice pice 3857 153451 oF 25% Therefore, ning on et goods sent (afer etn) ~ Ui (4,000 ~€ 2,000) ~€ 11500, (2) Loading om Coxing tock ~ 182 16800-24200, Mustration 16 B Ltd of Kanpur has a branch in Ambsl, Goods sent to branch ae invoiced at selling price, ie, cost plus 33458, From ‘he following particulars, you ate requted to prepare the Branch Stock Account and Branch Adjustment Account as they ‘would appear inthe head office books. z ‘Stock on 01.04.2002 at invoice pice 15,000 Stock on 31.03.2005 at invoice price 12,000 Goods seat to Ambala during the year at invoice price 1,00,000 Seles a branch On Credit 32,000 For Cash 75,000 Returns to head office at involve price 5,000 Tavoice value of goods lost by fire not covered by Insurance 1000 [CU.8.Com Hons) — 2004)7.24 Branch Accounting Solution In the books of B Ltd, (H.0.) Dr. Ambala Branch Stock Account cr ae Pama z Dat Para z TDi | Toaaeene SGD | ATE Mar | By Gacs SeteBareh RST Sia 2303 ar 31] To Goods Sarto Banh sgoana | [By Gasn Ac (Cas Sats 15.00 ee [Taare Asin Ne (Sup) oa) +) 8) roche A (Cat ab 200 + |B) Gace ow by re Nes) ‘poo + [by salrce os 22000, Ta ee Dr. ‘Ambala Branch Adjustment Account cr Oa Taran z Dal Pare z HOS aT TT | To CHO SAT BaneH ETI TED |B RorT_| By Sa ReseveNe NatoT) TT Ta GooaeLstty Pr Ne Nats 250 | 2008 ar 31] 8y Gass Sento rach AN 2) oo + [Taster Rosine Ae aca] + | By Banh Stock Ale Supls Not) ‘000 (Lear e9 Csing Sek) + |rocansrePret Love Ne hate 5) Maso T6780 a ‘Working Note Uy Goods ar set at ost + 354%, Therefor, he loading 2 3750 (2) Losding on goods set = 25% of 100,000 = 25,00, 1G) Lending on goods reamed ~25% of 5,000 —& 1250. 1 Losing on goods owt fie = 29% of 1000 € 250, {5) Con of goods foxy fie (1,000 ~250)~ 750 should not be charged o Branch a iti an spor os. 16) No spate Branch Profit nd Loss Aceoutt has bee ake lo prepare. Therefore, ei arp as been credited o Branch Adjustment Acco Mlustration 17 [BT Ltd, sends goods tothe Chennai Branch at cost plus 25% on eos. From te following paticlas, you are requited to show the Branch Stock Account, Branch Stock Adjustment Account and Branch Profitand Loss Account inthe head office of Invoice Price, Loading om oping tsk = 25% of 1,000 = Books x “Opening stock at branch a invoice price 20,000 ‘Goods sent to branch at invoice price ‘0,000 Lostinstransit at invoice price 0,000 Pilferage at invoice price 4,000 Sales 122,000 Expenses 32,000 Closing stock a branch at invoice price 24,000 Recovered fom insurance company agains los rant 6.000 [CU.8.Com. (Hons) — 2005) Solution In the books of BT Ltd, (H.0.) Dr. Chennai Branch Stock Account cr ey Faas z Date Farr z Tadanna we 0 By Soe Loma Ta NE Toor Ta Googe See toBranch Ae t,000 By Ploage Ne “00 TaSupbsinSock Ae 0.00 2) Sas ls 122000, By Baanoa ut 40 Tae Tea De. (Chennai Branch Adjustment Account cr Ta Pareahe z Dat Pare z Te Geos Lomin Test eae) 8 Sek Rare Ac TR Te lloage Ale Not 2) ‘0 {Leaing on aporng tek To'Stck Rese le ‘300 5y Goods Sent rach Ae og) Ta Crem ranch Prof & Los le 24400 5ySusps nlx Ae 2000Financial Accounting - Il 7.28 Dr Chennai Branch Profit and Loss Account cr. ae Para 7 Dat Pata z TePTSAORE 3a By Sa Sea aa Branch Expees Ae 2,0 8 Cree Branca Adusinet Rc 240 Ta Gana Protand Lass Al Prt) 5700 TEA or Dr ‘Surplus in Stock Account cr Paar z Pamala z To Cerna Bane Asner Ae aT) “TZ [By Choa Branch Sak Ae BI To Canal Bane Prot Los NN 1), 8,00 0 aa ‘Working Novs (A) Surplus in stock represents exces easton fom sls by selling goods above the fted pice (Le. cost + 25% profi When ‘Branch Adjustment Account abd Branch Profi a Loss Accoun ar prepared separately lading on surplus ceed Branch ‘Adjsment Aout a the Balance of te sup ieee to Brac Prof end Lose Ascot. However, en only Bratch ‘aim Account prepared the entire smh redid o Branch Adjurtment Account Se Mutation 17 (2) Loading on perage= 23° 4000-000. Theloudngss charged ranch jutmen Account The cov of poo peed S000 (4000 ~€ 00) however, jo be charged to ranch Profit and Love Account. Generally, ple teed as normal lest and thls why it changed to ranch Profit snd Love Account [Not General Profit end Los Acco). (8) Loading on goods ost-niznst~ 25440 € 10,000 2500. Te loding on goods losn-tai shared to Branch Adustncat Account Theat costof ood osiin watsit€ 2,000 (Noe) shouldbe charged General Profi and Loss Accoust beg abnorbal or. (4) Goods Lostin-Transit Account ce Pater z Pamala z To hanna Bane Soek Ne TIS [By Gro Baneh RBs Ne andra) 785 By Bark le dam rcs) 0 2} Caneal Prof ad Lars le 2000 Tome [ie Mlustration 18 ‘Ram Limited of Chennai has a branch at Nagpur to which office, gods are invoiced at cost plus 25%, The branch makes sales both by cash and on eredit. Branch expenses are paid diect ftom Head Office andthe branch has to remit all cash ‘received into the Head Office Bank Account at Nagpur From the following details, relating fo the year 2009, prepare the accounts in Head Office Ledger and ascertain Branch Profitas per sock aad debtors method. Branch doesnot maintain any books of accounts but sends weekly rtums to head olfce Paco z ‘ood Rarened fom Re Oe aia pee T2008 Runs ad fice alice prot 2400 Steck at Nagpur Barc an 1.1209 atince pes 2000 Sales dura eye — Cash 990 Croat 72090 Dot at Nagpur arch at 11.2008, 14400 cae eave om Date cae Orci alowed Delos $200 Bad Dots tg De year ‘a0 Sales Rts at Nagpur ranch 900 Salas an Wagon a Banch 2000 Rent Rates and Teresa Bratch a0 fie Exper at ogpurSanch sa00 Seka Branch on 1.122008 tincioe prs 2aco0 IGA. (PCE) — Men, 2010,7.26 Branch Accounting Solution In the books of Ram Limited (H.0.) Dr. Nagpur Branch Stock Account cr ae Pama z Dat Paras z a rg ant | ToBahnen 12000 |.31 | By Bak te (Cae Sabs) 4,900 dec.3+ | Ta Googe Sere toBranch Ae 120000 By Branch Dobler A(t Sao) T2000 Ta rane Deis Ae 800 By Goods Set Branch AC a0 "Rous ty asian) [Roumby aren Teena Adasen 4800 ySaroote 24,000 {Supie okesPe) TET TR Dr. Nagpur Branch Adjustment Account cr. ia Fama z Dat Paras z Ha 708 nc.31 | To SoekRenere Ale te 3) p00 an | ay sockResere Ae (at) Toren Prot oe 26920 | Des 81 | 8) Goes Seta Barc Ne te 2) ‘rarer rach PA Acs) By Banc lek Me Gu, Toa Dr. Nagpur Branch Profit and Loss Account Tae Fama z Dat Pareaare z a | ToEaR Eger Ne rc a Be Dec.31 | To Goma Pot and Los Ae 120 JD. 31 a0 Bw De. Nagpur Branch Expenses Account cr. Da Parcane z Da Parca z a Toe Ovc.1 | To Banke Rent 3800 ]0ae.91 | By Seren Pritand Lows Ae a0 To Bank is (Sabres) 12900 To Bank Ae (Mon enorss) 1200 Ta rane Dabs ead Ost) ‘00 TaBrane Dbl le 1210 (Oimurt Alone) Tea a De. Nagpur Branch Debtors Account cr. im Tama z Dat Parr z a oe wet | ToBamee die 14400 |dee.81 [ey Bach tek ne 1600 TaBranc Sock AC Ses, 72900 Reumby axtones) 8y Bare 4000 By Search Spars ls "2000 (Bae Deas ans Disca) By Baas ce 13900 ae 0 Dr. Goods Sent to Nagpur Branch Account cr. Tae Pana z Dat Panes z Ts] Towa Soon nara Was By aN SR Ne 8.2% | Ta Bano Aeuenant (eg) 22520 | ee 31 | (Goes Seto Barc 1.20000 Tae oe ‘Working Notes U) Stock Reserve on Opening Stock : Loading i 25% of cos, i, 20% of invoice prise, Therefore, lading on opening Hock 20h of 12 0 = 82.400, (2) Loading on Goods Sento Branch 20% of 1 (8) Lending on Closing Stock = 20% of 24,00 7,600 (1 20,000 -2,400)~2 28,520, 400.Financial Accounting - Il 7.27 Mustration 19 1X Lid. of Caleta has a branch at Delhi. Goods ee invoiced to the branches a cost plus 355%, The branch ris all ‘ash ceived tothe head office and ll expenses are pai by the head office. From the following particulars prepare Branch Stock Account, Branch Agjustment Account, Branch Debtors’ Account and Branch Pofitand Loss Account inthe books ‘of he head office (al figures in ®) Starch Debs on 1.12017 (000. Cashed rom Debio 7600 Branch Soseon 1.2517 (vee pea) 2400, Dscourtalood Det 400 Sales: Cash 5000. Badcebis ‘a0 rast (i.o00 Branch expanses psd HO 8000 Coote om ea fie re price) 72.000 Bracn sex on 3.12207 lls pes) 11400 Solution In the books of X Ltd, (H.0.) Dr Branch Stock Account cr. tae Pare t Date Fata z TAT nT | TORRE "AON | DOT Dos | By Ba Ne [Cash abs 300 (ee 3 | Te Goode Seto ranch Ae 200 By arch Debs ie ele 8) Blancs cis. 400, Tea aa Di Branch Adjustment Account cr Da Pao = Dat Peer = ‘Bi De Sy To Sak Reeve el ZED | BT Dos 3 5 Seek Rare A (No 7) aT Tec Pato 880 5) Goods Set Bren Ne Nate 2) 8000 (Traore Branch Prot 8 Los Ae aT 0 Dr. Branch Debtors Account a Dae Pa z Date Pata T TAT nT | TOOT ‘SHOT | TDs | By BENE ST By Bach Bens Ae ‘ecur alowee 400 Baa ceis ‘ao se 3t | roBranch Sack Ae sc,000 ay Bence 510 ee) Bea De Branch Profit & Loss Account cr Da Para z Dat Pate T A Oe ToBARER Te Ne TTD 3] 5 Gow Ps 15 ‘coun shoes 1400 By Goer Poi Lose te oss) ‘0 Bas sos 09 Cash ecenes 16000 6700 TEE ‘Working Notes () Stock reserve on opening stock - Loading is 38/3 on cost, i... 331s = 1331/5 % or IM of invoice price. Therefore, Toadiag oa opening saek ~ 1/4 x€ 2,400 ~€ 600. (2) Loading om goods seat 14 of €72,000~€ 1,000, (8) Loading on closing stock 1 of € 11 400~ 22.880, Tarotil Note Whes 3 sport Sranch Profit and Lose Account is opened Brash Adjustment Account wil show gross prot ad Branch Profiand Lars Account wl sow net roi the branch Mlustration 20 ‘A Calcutta firm has a eal branch ot Dhanbad. Al goods are supplied tothe branca by the head ofic which invoices the ‘goods atthe selling price which is calculated at cos plus 25 per ent. ll expenses incurred by te branch are paid out of| fan imprest account of € 10,000 which is replenished by the head ofice every week. All collections by the branch are banked intact tothe credit ofthe head office. The branch maintain no books of account except a memorandum debtors ledger. Physical verification of stock at the branch is dane annually and the difference between the actual stock and the ‘book balance i adjusted, (gues in 2) Branch Det Alan.) 125000 Cashcoectos eB (ning cash sas 85000) 28500 Btarh Sok At ale vale — Jan) falo00 Deon alone gees ‘000 Com tran 50100). Credle at Branen 24a000 Sood sero Sanh at Irvocs va) ‘300,800 Amount sett Branch or expenses ‘eo7.28 Branch Accounting {As at 31st December, 2017, the branch had cash on hand represeating unspent imprest of € 8,000. The sock on hand ‘on 31st December, 2017 vale at invoice value was & 43,00, Prepare the foliowing accounts as apearing in the books of the head office: (a) Branch Stock Account (b) Branch Adjustment Account (e) Branch Debtors Ascount and, (@) Branch Profit and Loss Account Solution In the books of Head Offce (Calcutta) Dr. Branch Stock Account cr Tae Paras @ Date Faroe z Fir ln,t | Tobamreawe BOD | TT De | By Banc Ne ae ea) ca Doe 21 | Ta Googe Seti rach Ae scoa00 By Branch Doster le 240.00, By Sterage Stk Ne ‘2.900 By Baaoa 5,00 EO [ae Dr. Branch Adjustment Account cr om Faraan z at Parr z BT DaE Ty To Soak Reeve ee ‘500 [BOT Doc 1] By See Rasa Ne le Tar Ta Stage Suck AEN) 2a 18} Goods Seta ran A Nate) exio00 5.000 F500 TE Dr. Branch Debtors Account cr ia Fama z Date Para z TAT int | ToBacewe TSH AAT Dee Ti] By Bane NEC a0 = ISIN] or Doe 31 | Ta Branon Sook Ae 24000 yr Exgonses Ae Osu lowes) |“ 19000 5y Bares ue EI Dr. Branch Profit and Loss Account Tae Tana z Dat Paar z BT Dos Fi] To Bans Cpe Ne eT) “5g | BOT De i] By Gow PT Ci TaSterlage Sack AN 3) 00 Ta Gana Pree Lose Ne rata co BO ‘Working Notes: br. (1) Branch Expenses Account cr Tae Paral e Date Fares 7 ‘BAT eT Toa Dabo Re TODGD | AAT Dec Bi] BY BAPE ET To rare ety Cash Ne 38,90 Be os Dr. (@) Branch Petty Cash Account cr, Te Paras z Dat Pare z THT n,7 | ToBamnoowe TOG | AT DoS By Bah Capone DapreRTgaR] | — 3608 Dee 3t | ToBankAleRemtonoterexpenses) [__a5000 By Baloo ce ‘3000 600 00 (3) Shortage In Stock Account cr. Parcs t Date Paes z ‘ATO | Toa SAE ZOD | BAT Dec By Biah Rasines Re aaah Za By Branch Prt Lane (Cos ‘00 Tae T2000 tera to Branch Profit and Loss Account suming that ite nonna in aie (4) Loading on penis tock i 1/5 oF € 80000 ~€ 16.000 (8) Loading on gods set to atch i of €3,00,000 = € 60, 16) Loading on slowing stock = 15 of 843,000 60, 00. 2,400 abe charge a Branch Adjstnent Actout and cot of chorage (4 ot 1,000 89,60) ito be changedFinancial Accounting - 117.29 Mustration 21 Maruti Ltd has a branch at Lucknow. Goods are invoiced from head office atcost plus to head ofice and all expenses are met by head office. Prepare (i) Lucknow Branch Account (i) Suplus in Stock Account; (i) Lucknow Branch Debtors Account; (iv) ‘Goods Sen: fo Branch Account (¥) Stack Reserve Account; (¥) Lucknow Branch Adjustment Account; (vi) Lucknow Branch Expenses Account; and, (ii) Lucknow Braach Profi and Loss Assount inthe books of Maruti Ld. under Stock and Debtors systom to show profit earned atthe branch fom the following: (all figues i 2) Branch emits all cash received Sek ont A201 (rie pes 15800 Cashcolece ton Debs ago Deters on et Ap 2017 {3700 Goods otunesby Dskors $500 Goode ind aon rg he yaar 6,900. Supls sek rice pee ‘0 Sale of ranch: Ces sles 35000 Data alowed ay Delos 0 Cradle 100 Expenses atBrancn amo Solution In the books of Maruti Ltd. Dr. Lucknow Branch Stock Account cr Date Parca e Dat Peter z Ta | Toba ba Ta [ST azTTS | By Sane aah eh] ET anazore | Te Goude Sotto Branch Ae (hate) 4,000 By Lucknow Br. Detar Ne (resls) | 30,100 ToLuchrow 8, Deis Ne Renn) 1500, By Beans os 6300 ToSuisn Sek x Trae Tao Dr. ‘Surplus in Stock Account cr Date Parca z Dat Pate z Fisa018 | To Baek Amen Ne Londra) 7a | sra.ae | By Loarow Br Soor Ne 0 ToBench Prt Lots (Cs 20a 38 eg Dr Lucknow Branch Debtors Account ce Da Pare z Dat Pate z Tazo] Toba 70 [Tae] By Ba ARE sizo1e | ToLucien stuck Ale (cedtsaks) | 20. ByLudraw Br. SoseAc(Saesretns) | 1 S00 3 Bc Exprses A (Dszeul alone) 50 By Balance cit 7480, ‘Goods Sent to Branch Account ce Parca z Date Peers z ‘ERAN TaRraeh Asia: Ne eT) Tatts [a20%8 [By lucnaw or Soox Ae BET Purchases Ae (Tansee) 3601 FO Bia Dr Stock Reserve Account ce Dae Pare z Da Peele z TTSaOTE | Te Bench Asien Ae (ranted) ‘5200 | 42017 — By Salanca Loar nopanng wom) | £200 ToBalans ve 2100 [staan |3)srcnaausnen, 200 (Uoaarg en cos soc) TE} 7350 Dr. ‘Lucknow Branch Adjustment Account cr Tae Pane z Dat Panes z “S218 | ToSaak Revove te ied [sTazUie By Ska Rawane Re 5 UUsadngan dosing sox) ‘Uaiang en operirg Sc) Teche Proto 2200 8 Geats Set Brann Ac ‘9000 (Transfer Branch A) (loasna on goes er) ay Sula Sok Ae stn) 100 Te Fine7.30_Branch Accounting Dr. Lucknow Branch Expenses Account cr Da Param z Dat Parca z EAE | TOESRAE 70D [TSE] By Laon Barc Pte LSE 758 Te Lutron Gren Deir le 40 (Oren anes) Te Dr Lucknow Branch Profit and Lose Account Tae Tana z Date Para R20 Toney Bearer Tia [S308 [By Gow Pb ry TaNst rf 1438 By Suplisin Sick Ne "0 (Tarte to Genera Prot & Loss Ne} Tae oe ‘Working Notes: (Divo Pris of Goode Set [i acng on Opening Sock z Cost of gods se EON) Lesdng = SO of ce, SITET a Te Pa pc, aT ‘Lozi SO of cost 16.900 | baang on cpanrg sox 156003 = 520, Eno (2) Loading on losing Stock = 15 016.900=€2,08, “Tatorial Noe: "Looing” of ups in ork & 100 fo Be eedad vo Brash Adj Account aod "Cant of apis ook Mustration 22 Red and Co. of Mumbai started a branch t Bangalore on I 4.2006 to which goods were sent at 20% above cost, The branch makes both cash sales and eve sales, Branch expenses are met fom braneh cash and balance money retumed to 1.0. The branch doesnot maintain double entry books of account and necessary accounts relating wo branch are maintained by 11.0. Following further details are given for the year ending ou 31.3 2007 z Cea Cae Sem Bah Taos (Goods Reseda rare 313.2007 alin proe ‘03000 Cet ae fre year 3.000 ‘ling Dotson 3.32007 ‘00 Bas Ot win dung he eat “0 Cosh omits, 4,000 (ing Coston Hard at Bach on 3.32007 “000 (ash Reits oy Ha rach Gg he yo 0 (ing Sock n anal Brae tive eo 2000 Exgenies hereto 24000 Draw up the necessary ledger accounts lke Branch Debiors Accoust, Branch Stock Account, Goods Sent fo Branch ‘Account, Branch Cash Account, Branca Expenses Account and Branch Adjustment Account fr ascertaining gross profit and Branch Profit and Loss Account for ascertaining branch profit, 1G. (PE - 1) —May, 2007] Solution In the books of Red and Co. Dr. ‘Branch Debtors Account Tae Paras © Date Tamales Bar Mar Toran Sexe T7600 | HOT Mar] By eh Ch abo Ta) By Bas Dass By Baca ie Tea Dr. Branch Stock Account oa Para t Date Fave e "BT War To Cea Sa Bh TORT | OT Mar] By See airs Ae TSO To Brann Ausra A te 3) 54000 By Banc Cash Ne ‘000 y Goode rane Note 2) "2.000, By Banoo ue 12000, Ta EeFinancial Accounting - 7.31 Dr. Goods Sent to Branch Account cr Da Paes z Dai Params z TT ar ST | Ts Bane ner Ne NET TG | AOT War ST [By ah ack Ne Ta by Pacha Trading Ae 10.000, T07 Fe Dr. Branch Cash Account cr. Dae Fatale z Dai Fara z Tar war st] Te Dato Ne TE [HT Mar ST] By Bach Capone He 28 TBH, Reritaoe fom 10) 600 | [By Ho. Gam memnes, ‘5000 + TeBienen stoke + | Byles ce “4000 (Cath Sales Salar ave) 4,000 TOT ako Dr. Branch Expenses Account cr. Tae Petals z Dai Tana z TOT NaraT_| ToBem Cane ZED [BT NarST_| By Bach Pro end Lanse ero Taal Dei le ‘ TE Eno Di Branch Adjustment Account cr Dat Fatale z Oa Pareles z TT Wars] To Soe Rove RT War] By Goode Seto rach Ne a Zia aad oe 2a00 | * | By Branch tc Ae 8) ‘000 a Tens Noe 5) 20 + |ToBanenPrettand Loss Ae 10,900 TE coe Dr. Branch Profit and Loss Account cr. Dat Paces 7 Oa Parcane z ToT wart] To Bao Epes Ae TEA [BT Mae 51 | By Banh ate Ae To Ta Gora Petar Los Nie 45600 TA cos (0) Leading on Goods Sent ~€ 3.2000 —€ 100,000 ~€ 2,000, {2} Goods in Tranit= lavoce Price of goods seat avece price of goods recived bythe brasch €1.20,000 ~€ 108,000 -€ 12000 (rinse pice (&) Surplus in rane Stock Account rpresente excess pie raion over and above the invoice rics, (4) Loading on closing stock = 1 of € 12,000 2,000. (8) Loading on goods in tanait = 1' of 12,000 =€ 2600, Mustration 23 Eastern Chemicals Lid, has two branches at Bombay and Nagpur. Goods are invoiced to branches at cost plus $0%. [Branches remit all cash received to the head office and all expenses are also met by head office. From the following particulars, prepare () Branch Stock Account; (i) Branch Stock Adjustment Account, (i) Branch Debtors Account () ‘Goods Sent to Branch Account; and, (v) Branch Profit and Loss Account forthe year ended 31,12.2017: Bb) Nagour) Bontay Stock on 11.2017 (vee ics) 18800 31,200 Goods retunso asd oo 3000 Deteson 1.2017 1350017400 Transform Nagurney 4200 Goods iniad (Cos) 8000 72000. Sharapeof sok ‘0 Cae aos 5002 7000). Supbannaock = cract 2000 620). Danouralonad cesta a Calton ram ders 81800 $9800. Exarseeatbanches oa00 Ratu tom ceo zoo 3000 ICU. B.Com, Hons) Nogpar®) 420 eo m0 na4a0 Adapted)7.32 Branch Accounting Solution In the books of Eastern Chemicals Ltd. Dr. Branch Stock Accounts cr Tai Faas Taney | Nagar | — Dat Pane Tontay | Naa TAT ny | ToeaeBE “goo |_ 31200 | POT Dee ST] By Saree (oan sls) ‘aoa0 | Togon bee 2t [Ta GueesSentoBrrer we | scza0a | 128900 By Branch Oesios Ne zoo | zm Ta ane Debtors Ne 200 | 3.200 ByGanis sents Aegan] “3000 | — To Goes Soriodanenae | za] By Goods Set Branch Ae a0 ‘rant Tart To suplin Stock Nc =| a 8y Stotagein Sock Re sof By Banoo ce siz | a4o0 Tara Tara [Taz Dr. Branch Stock Adjustment Accounts cr Tae Pamala Beneey | Nagpur [Dat Para Borbay | Naan Boas TH ToSharage nSaek AEE] 300 TOT Des I] By See Reser e200 | 10400 To Sock Rasen Ale 37 | 2800 By Goods senlio Br AN) | 36400 | 24,600 TaGess Prec xen | 42aca BySupbsi Seek s=2) | "| “zea wear | Ee | Ba Dr. Branch Debtors Account cr. Tai Faas Taney | Nagpur | — Dat Pane Tontay | Naa TT nT | TOEaRERBE ego) [17400 | BOT Ose] By SEN ee00 | SENT Tagan Sok Ae 2am | 20200 By Src Stock Ae aitoo | “3e00 Bybee Exp. Neos ates] a0 | Ton 5 y Salone 6 rata | 00 Tea | TT ga | TT or. Goods Sent to Branch Accounts cr. Tae Pamala Benbey | Nawear [— Dal Fanaa worbay | Naan ‘BAT Daa | To RES 300] —| HiT Des 3] 5 Se Sea Ae Taga | E8000 Ta Bane Sook Ne =| 400 By Sane Sock We ‘00 | ‘rare (rate Tatra Sek As Nene 3} | x40} 400 TaPuechasesAle(Tansay | F500 | 69200 TET | TET TR [TR Dr. Branch Profit & Loss Accounts cr ia Females Boney | Nagear [Dal Fara Borbay | Naan ‘BAT On. Ti Toa Egarees NENG] ZO] 00 [Dae] By Gs Pow ne ESO | A00 Te Staiageatnc Ne fo) By Sus in Seck =] oo TaGawadPrettoeae | oun | 2e700 EHO em Ee) eee Working Notes Dr. (1) Shortage n Stock Accounts cr Ta Faia Boney [ Wagner [Oats Fatale Eentey_[ Near Bio Hi Tea Sear Ae BHO] — [AT Bec Fi] Bane Sack Raum] SOT — By banc Prt Loss Ne io] = =p ep Be (2) Surplus in Stock Account ce ae Pamala Bente | Nageur [Dat Para Bonbay | Naan re a oo ToBranc Prt Lae Ne =| = [0 wa {8) Loading on net goods eat lncuding transfer to Bombay branch: Goods sto banc (die) 102,00 plus goods veeved fiom Nagpur 200 Lese goods retumed to head office ® 3,00, Therefore, net gods seat ~€ 103,200 Loading is 13 of £103.20 = 834.800, Nagpir Branch: Goode set to branch ety € 108/00 lese gods need to Bombay & 4,20, Thorton, st pods set to brnoch= € 07,800 Longs 1 oF 103.800 -€ 34600, (8) Branch expente Total branch expenses ae acta expenes pe discount allowed, i, 10800 + £900 F 1,200 for BombayFinancial Accounting - Il 7.33, Tutorial Note: In case of transfer of goods between the branches, the sending branch will treat the transfer ‘as if returned to head office’ and receiving branch will teat that ‘as if received from H.O.” Mustration 24 ‘A Compaay’ with is head office at Calcutte has a branch at New Delhi, Goods are invoiced to th branch at cost plus 38!)%, which isthe selling price. The following information is given in respect of the branch fi rae ended S13t ‘March, 2018: z Gods Sel tars vice vali) 141000, Dacourtaawed Sek aan (4207) lng pres 124000 Bod tt cant alee 1.80200 Stock atbranc (3.32018) at sag pre Ret ton Debs 16900 Brarch Debio alr (3.32018) Bare expenses pi or cash 53500 Calocns om Delors Sane Dei babes (14.207) $1)000. ranch Das cheques reeraddshoraves ‘You are requited to prepare the Branch Stock Account, Branch Debtors” Account athe Branch Adjustment Account to revel the profit ofthe branch forthe year 2017-18. Solution In the books of Head Office, Calcutta Dr. 'New Delhi Branch Stock Account cr. Date Parise z Date Petes = Taati | Te Saanb TG | STAZOTS | BY BHAT sh se BIT 5.32018 | To Goode Sotto Bach Ae “4,900 By New Oath rarch tos A ote 1) | 280000 New Oa Deir le (Ratu 00a By Shotagensack le Balrcrgfigus)| 2000 By Blanca cit #400 007 E0000 Dr. ‘New Delhi Branch Debtors Account cr. Dae Pane z Date Pan z Ta20ir | Toba bs a0 | STAZNTE | By BURAK Calter) 70006 12018 | TeBank Ae shone ofcoque) ‘00 3y Neu Dah arch lech 6000 ToNew Dei Brancn Sock Aneto t} | 28n00 By New Oth Branch Expenses Ae ac deot 500 Oroowrtaves 34.00, 2500 8 Blancs cis 8500 a 2600 Dr. New Delhi Branch Adjustment Account cr. Date Parise z Dat Pats = ‘ERAN | ToRrael Bpanses Ne (is) BED | HAUNT — [By Sek Rosen Neate) 5000 So Storagennaok (Nae) 200 8} Grote SenlioBrancn Ae Nees) | 24,000 Te Sek Reserve Al ta 5) 2000 ToNet Pr Tan, 9 General &LS) | $8.00 [Faso 16000 (a) Cre sales have not een given inthe problem. Ste balancing fg of Branch Debio Accounts to be taken a rei es 1) Loading i 3371) oo cosh, fe, 139% » 1334 % or 1/4 on invoice value. Therefore, loading op opening stock is (2) Loading om goods seat ~€ 480,000 = € 1 20,00. (8) Total branch expenses ~ Cash expenses ae ® $3500 + Bad Debts & 1500 + Discount allowed ® 1,000 = & 56000. (5) When so septate Branch Profit and Loss Accounts pepacd che cue amount of shortage or Supls in stocks waned to ‘Branch Adjustment Ascout. eke Branch Adjustment Acsount nd Branch Profit an Loss Account re prepared cert te losing o shortages istrmsfered wo Branch Adjustment Account apd costs ansered'o Branca Profit abd Loss Account (6 Loadingon closing tock ~®48,000'4~2 12,000,7.34 Branch Accounting Mustration 25 2X Ltd. has retail branch at Allahabad. Goods are sent by the H.O. tothe branch marked at selling price which is cost plus 25%. All the expenses ofthe branch are paid by the H.O. All ash collected by the branch (from customers and cash sales) is deposited to the eedit of H.0, Account From the following particulars of the branch, prepare Branch Stock Account, Branch Debtors Account, Branch Expenses Account and Branch Adjustment Account in the books ofthe H.0.: (al igres in ®) bios on 1.2017 Driers on 31722017 lve wth rach ance ean 1.12017 vero ih earch tie Pico on 31.1227 (Cash sls dung year ‘noi spond ne 0, Ne dung he ya Solution 12.00 Gueds tara HO. trie Poe 14.900. sali paid 16900. Rempaa 17.900 Diseee toned a calones 0.900. Bed dete tan 1.2700. Spoiage acc price 00 00 000 2000 ‘000 20 ths problem, cred sles and goods sent branch ate ising Therefor, he balancing gue of Branch Debtors Accouat wll be ‘weated as ced sales and th alancing figure of Branch Stock Accous wil be sted as goods sto bratch Inthe books of X Ltd. (H.0.) br. Branch Stock Account cr. Da Paral z Dat Parone z Bir n,t | Toeabreawe 6:00 | AAT Dee By Cat esha) eo Dee 31 | To GoneeSortioBrachAeiiole2) | 140900 By Goods Seto Branch Ae Rees) 5000 £8} Srnch Defer (Cra eas) 2000 By Spoiage Ae 2000 By Balas ie 7000 Tes 1000 br. Branch Debtors Account cr. Tae Pana e Date Fares 7 BAT Tan.7 | TOEAREBE TED | BAT Bec 31 By BARRE aT Tr Dee. at | To Banc Sock Ae (Baby fou} 2000 By Dot Alowed Ne 700 By Bas Deas Ae {ooo By Saaoe se 14000, Ta coo Dr. Branch Expenses Account cr. Tae Paras z Date Fanaa z ‘iio T Tocaah Ae ant Sabr=s) OGD | BAT Bec 31] By Ban PH A Loss A 3000 TaDeenirt Alone Ne 000 ToBaddens Ae ‘000 Ta BaF Dr. Branch Adjustment Account cr. Tae Pana z Dat Parr z BT ve Ty] To Spa NE "HE | BH Doc) By Sek Resove Ae a To Stok Rasee Ne 3400 By Goods Seto rach Ne (Nae 2) 71908 TaBrane Prt Loss We 26400 20 oe" Dr. Branch Profit & Loss Account cr. Da Paral z Dat Parr z ‘Bi oas 2] Toa Egarees Ne E00 | BAT Dee | By Banh ater A ry Ta Splage A (Cas) 1800 Ta Gane Prt Love Ae 1400 At BeFinancial Accounting - Il 7.38 Working Notes (0) Total amour deposited in H.O. Accoue is 127,000 but includes € 6,000 fr cash sales. Therefore, amoust collected rom Asiors=€ 1.27000 = 860,00 = 67.00, (2) Goods sent to branch have os Ben give, The balancing figure of Branch Stok Account wl be teate as goods seat branch Total goods sent tn Sranch = 10,00 ©5000 (at invice pce) as heen etured to ead office Losing on ne good sent (6) Loading on spoilage € 400 iso be debited to Branch Adjustment Account and the balance amount € 2,000 —€ 400 ~€ 1,600 is (§ Loading on opening stock = 15 of € 16000 ~€ 3200; Loading on closing stock = 1/5 of 17,000 = 83,40, Mlustration 26 “Multichained Stores Lx, Dethi has its branches at Lucknow and Madeas. tcharges goods tits branches at cos plus 25%. Following information is available of tho transactions ofthe Lucknow branch forthe year ended on 31st March, 2018, Balances on 14.2017. Stock ® 30,000; Debtors & 10,000 and Petty Cash € 5. Transactions during 2017-18 (Lucknow branch) (all figures) Goods sero Luckrow arch at vce ce 3.25000. Cashsonttor Penyapenses ‘00 Goods ead Hoos Ofc alia 10000 Bade at Branca 0 Cae aos 199000 Goods antareda Maer trench under 40. even 18010 rot sat 175000 wwrancs ages 98 by HO. sp Goods ieras voc pris) 72000 Goode remedy Debs 0 Gods sine voi rie) 5000. Inswance Co pao HO. less bye atLucnow 2000 Balances on 31.3.2018: Petty Cash 230; Debtors € 14,000, Goods worth 15,000 (included above) sent by Lucknow branch to Madras branch was in trasit on 31.3,2018, Show the following accouats in the books of Mutichsined Stores Lid, : (a) Lucknow Branch Stock Account, (b) Lucknow Braxich Dabiots Account (e) Lucknow Braach Adjustment ‘Account; (d) Lucknow Branch Profit and Loss Account (@) tock Reserve Account and, (1) Goods Sent to Lucknow Branch Account Solution In the books of Multichained Stores Ltd, Dr. Lucknow Branch Stock Account Dae Par z Dae Pate THAT —| TERRE sa | STs By Sas sre asian AE RS) Si2018 | To oude Soro tucoow Bach Ne | 3.25000 By Saree (cash sabs, ToLuchrow Branch Ger Ati 0 3) Geode Pires Ae 8) Geos os by Fre Ne 8 Gon Se Luho, (Tart 8 Ludo arch Debs Ae 8 Balance cit. TERT Di Lucknow Branch Debtors Account Dae Par z Dat Paes TT | Toa a srdante | TeLicinew dnc Sek Ne 175000, Bak Ne Ba F(a. tom ders) 8 Losin Bare Sox Ae aus) 3) Banca ct TIT Dr. Lucknow Branch Adjustment Account Dae Para z Dat Pama z Sa0t8 | Toots Pore ae [R208 [By Teak Reve we 5000 To Goods Lost Fro Ne 100 8) Goode Set Branch Ae Noe 8) 1000 TeShck Reserve Ne oi TeGeon Pte 900 00 cr Lucknow Branch Profit & Loss Account cr Pare z Dat Feta z 5 oad Para a Teas [Tze |y Grows Pome BR TeBranch Exper Ale ie 9 Gone Pal 8 oss AN 6) a0 FED a7.36 Branch Accounting br. Stock Reserve Account cr. Tae Fama z Date Para z ERATE To Lew Ben ARNT 5000 | zat? |B Ss o Sia Ta Babee ois 760] 3132018 | 8) Lucknow arch Agustent Ne 9700 TE oan Dr. {Goods Sent to Lucknow Branch Account cr ime Fama z Dat Paras z RIOT To Lew Ber Seek AE TODD | STANTS | By acon arch TSU Te Lurene Sk A 16000 TLisiow Sen AdisiersA Ww) | 40000 TaPachasee Ae 240.90 35000 ‘Working Notes br. (1) Petty Cash Account or. Ta Patan t Da Paro = TaaiiT —|Toabresve sa] F3a0'6 | By Sanches le Ea staaote |ToBarkae 34900 By Babs ee mo ST ie De {@) Branch Expenses Account cr Tae Pana z Dat Pare z RATE | TOERIDRER Ne Soo | STE By Lairon Branch Prt Lane AE HT Ta Bank le race chs) 0 TaPety Cash Ne na Ta aE De (9) Goods Pilferred Account cr Tai Fatah z Date aoa z FRADE Tousen Bnet Sack Ne 560 IT3z0°8 By Levon Bane a. Ne Coa) 8} Lucrow SrarchP ALA (Canh 160 7 720 Dre (4) Goods Lost by Fire Account cr, Tae Taras z Date Para z FRADE] Toten Bet Sek Ne 560 Taare By Ltkrow Banc ah, NeICoRaTa) Tom By Bare Ae (Clam ache) 00 8} Canora Pat Lom Ne te 6) ‘poo 5a 0 (5) Net Goods sen to Branch 300,00. Leading ~ 15 of €3,0,000 = 60,000. {6 For ealealuting tue prt of the bach, a abpoma oss should be debited to General Profit & Lass Account Het, € 1,000, has Den chargedto General Profit & Loss AccoutHowevet, iis charged to Brauch Prof & Loss Accout the profit would bee 178 Mustration 27 Madras Lt, invoices goods tots branch at ost plus 33"/%. Prom the following particulars prepare ranch Stock Account, Branch Stock Adjustment Account and Branch Profit and Loss Account as they would appear inthe books of head office (all figures in) ‘Soca enmancament rach at vps 180400 Retum cf gots a had ato (ove pris) 2,000 ‘Stock at ea brane a nae pen 120000 Cre salt tanen 7000 God ear itranc dng te yer ice pce 1000000 vce vale of good ied 10000 (nu poas msc at ® 20,000 rach en Noma ls al anc de wastage ard detrraton ‘5132018 ual ty anc eo css oe oa at sock atic ai) 15000 oan ae atranch 90.000, “Maairas Ltd. closes its books on March 31,2018,Financial Accounting - Il_7.37 Solution In the books of Madras Lid Dr. Branch Stock Account cr Ta Fae z Dat Pate t Tai | Toa ‘Temua |T320"e By Sark Ne Cas cabs) Toapoo te | Te Conds Sento Branch We sa g00 5) Geode SentiaBrana Ac Reus) | scO0 By Branch Debs A Creat sy) soo 8) Geos Paros Ne ‘000 By Balance cs atbanch spam inant ‘00 EI 00 Dr Branch Stock Adjustment Account cr Dae Pare z Dat Fata z EAR To Grote Pored A Loaaeay 7500 [sT3z018 By Ske Rasane Re oo To Sinek sare le le 2) 35000 3} GeotsSentioBrancn Ae Newt) | 237500 Toes Pato 237500 BIS a Dr. Branch Profit & Loss Account cr Dai Paeaa z Dat Paes t EERIE | Ts Gan Paced A (Cond TOD | TATE] 5y Goss Pas TTS TaGenval Prt Loe fe 20,000 2750 TT losis automaticaly adjusted the Branch Stock Account. Inti problem, normal aes oF 15,000 hs ber neualsed bythe profit males above iavoie pice of €1,000-If teeny is made Tor aural ls the Branch Stock Aecoust Wil bea under br. Branch Stock Account cr. Dae Para z at Pate z TT | Tea TEDRET | FIDE By Sa NE [Casheabs, ToDo S206. | 19 Goode Sono arch Ae soa 3) Gents Soni Branch Ae ‘000 ToSrmneh Siok hiro Ne "000 By BrarchDobirs Ae 000 (Potten ales tora te re) 3) Geode rs Ae 1000 By Nomal aes le 18000 Sydnee stbarch spo invest ‘i TE Taso ‘Nora os so be debited wo Branch Stock Adjustment Account by € 15000 andi willbe edited by € 1,000 for raion es, ove evowe pices Th gros prof will za unchanged a the examination ‘Werking Notes (0) Total goods seat branch is®10,0,000, Goods of & 50,000 bas boon returned bythe 950,000 Loading om goode sent (Net) = 18 oF 9,50,000 ~€237, 50. (2) Stock reserve i alo tobe etext on goods in nat nation to closing stack a ranch. Therefore, the loading is 14 of a.20 000 + 20,000) ~€ 35,00, (8) Loading on goods peed it be charged to Branch Sock Adjustment Ascoun an cot be charged to rach Profit and Mustration 28 Subhash Blectrcals has its branches at Chandigath and Gwalior ta whom goods ate invoiced at cast plus 25 Following information is available of the transactions at Chandigarh Branch forthe year ended 313.2018 Balances on 14.2017 : Stack al invoice price € 40,000; Deblors& 12,000; Peliy Cash € 150 Transactions during 2017-18: all figures in®) Wh. Therefore, net goods Satis & Goods srt achat aba pce 20000. lsrane company pia had oes ao Goode etnad than oe ance pre “S000 Cash sotto pey nprses Bid Saetaaes 103t00 Hades ‘a rect ale {Y8D400 Goods ventas Glo branch ato pres rao Noma atinve pce 35)_nsuance uae pacby fosc aes ‘ao Goods piered tre pe 53003. Gand resmed by aso 50 Seeds sty es mabe poe ca Balances on 31,3.2018 : Debtors € 11,000; Pety Cash €250; Stock? Note: Goods transferred to Gwalior Branch were i transit on 31.3 20187.38 Branch Accounting Prepare for Chandigarh Branch : (i) Branch Stock Account; i) Branch Adjustment Account (ii) ranch Profit, Loss Aecouns (iv) Stock Reserve Account and (v) Branch Debtors Account Solution In the books of Subhas Electr Dr. Branch Stock Account cr. Ta Paras z a Parca z Tazii7 | To banren “mo [3.2018 | By oars Set Branch Ne Raa) 7500 Shante [To Goose Sarto Baneh Ne 42090 By Bark le (Cae Sab) 105000, Ta Bane Dob Retin) 50 By Branch Deters Alero Sao) 10.00 By Goods Pro Ae ‘3000 18 Goods Lostby Fe le too By Gres Sete Grae anc Mears) | 12000 8} Nomal Los At Nae a By Saroa ce 141280, Tae [ars Dr. Branch Adjustment Account cr. Ta Paras = Dat Pare z FRADE | ToNermacow Ae oe Bo [Tazo [By Bane Sak Resowe NE No ‘mm Ta Coote ood edge) ia By Goods Sento Bach Ne Na 2) wooo Ta Goats Lostny Fre Ne eadrosiows) | 300 ToGo Seo Guertenen de ews} | 2400 TaBranen Sot Rarewe (7) 220 TaSranc Prt ard ove Ae ea cod co Dr. Branch Profit and Loss Account cr. Tae Paras z Dai Para z RIO To Goo Pioed Ne (CoT HOO PHT By Baca Ae aT TaBlanc Exparses Ne ac Det 0 Ipswance Chagos x Pay Egeres ht) 3180 TN? reored a GanelPaL ng [21720 FER ao Dr. ‘Stock Res cr. Ta Pama z Parser = Ta2ITT | To Bane Rasen NE ‘5000 PT4z017 — [By Bar Bo) ‘000 siaanie |ToBabneecd zazi0 | 31dzote | 8) Banch Agusta Ne Note 7 waz TE ero Dr. Branch Debtors Account cr Tai Paras 7 Date Fane z Tan | eames TZOG0 | STaz018 | By Beh Eapaoas Ac BAD state |Tobrana Sock Ae ea) By Src Sok Ae eu) 0 By Barc Ne (Cas Colect, 10:00, siaznte |B) Sainos 6 "000, Taam [Ez ‘Working Notes (0) For eslcusting rane Closing Stock (when its nt given), normal oc i edited to Branch Stack Ascount 3 nice pie (2) Loading on met goods seats Goods set to ranch € 4.20000 less goods returned head oie € 15,00, Therefore, net goad sot = #405 00 Loading 18 of € 405,000 © 00. (8) Loading on goods transerred wo Gwalior Bane U5 of € 12,000 ~€ 2,00 (4) Loading on goods pilfered: 1/5 of 3,000 = € 600. Cos of goods fred € 2.40 (3,000 600) wil be debited to Branch Profit and Lass Account. (5) Loading on goods lst by fr: 1/5 of 4.000 = 80, Cost of goods lost by fie #3200 (4.000 ~ KU) wll be debited wo General Profitand Love Aout (6) Loading on opening stock: 1/5 0840000 ~€ 8,00 (0) Leading on losing wock 1/5 of € 1A, 130 25,20 {W) Feity Bapenses "Opening, peliy cash € 150 lar cash sent by hen office fr petty cath ~€ 3,000 less losing ety es east 81 900,Financial Accounting - Il 7.39 ‘Sometimes, Branch Stock Account may be maintained under tvo columns on both the sides —Invoice Price Column and Cost Price Column. The ‘Invoice Price Column’ being a mere memorandum column, all double entries are with the ‘Cost Price Column’.Gross Profit or Loss is disclosed by the ‘Cost Price Column’. The sales and sales returns are same for both the columns. Mustration 29 Pure Silk Company of Murshidabad has two branches, one at Calcutta and the other at Deli. Goods are invoiced by the “Murshidabad head office tits branches at cost plus 50% on cost. Both cash and ereit sles are made by the branches and leash collectedby the branches is sent othe head oie and the branch expenses ae met by the head office. The following particulars ar supplied bythe branches fr the year ended 31st March, 2018 (all figures in) Cah Dah Secor Roe 1 07 na PS) 8800 eo Brarch Osis on Al 2017 18600 7400 Goods Rerived tor Hen Oca Com 38.00 Tea ranch Sle CaP 50.0 7.0 Trad 32.000 aie Goats Rated by Dating 200 3000 ash Relat for Dios Toa Te Goods eed to Head Ofc vio Pee) 3000 Ni Goode tansared fam Dei Branch io Clula Sach a a0 Supls of rane Sok eee Pe i ‘0 Shotag of anon Sok nv Ps) 0 Nt Dau Alone Curae 0 Tw Expenses ranch ao 700 Prepare: (a) Branch Stock Accounts (in Double Columnar Form); (6) Branch Debiors Accounts; and (@) Branch Profit and Logs Account fom the above paticulas in the Head Office Ledger Solution In the books of Pure Silk Company (Head Office) Dr. Caleutta Branch Stock Account cr. Da Paradis] iin Pre] ContPree | One Fatale Pic] CoalPice © © ® TAT —] Te Bae BF ee a siazme |TeGuedsSentoeranchAlc| sazaue | 6000 By Branch Debio. 2am] «2000 (Cea) zean| 2400 fyconts Ser Brinewe | 3000} 2000 (Rotarod to Hane Oc) soa) 200 so} eae Buch Al essed nize | —rs20 for Da ranch franenPranalove Ae] =| 2640, zie | 122.40 warm | Ta Dr Delhi Branch Stock Account cr Dae areas ria Prea]ComtPrae | — One Pareles Pica] ComtPrce © ®) ® TAT] To Baan BF eH a 1a2018 | TeGoes Sento sarow | 72000 By Sraren Debio soam| ean arch A (Nate 5) (Cet Sak) TeBraneh Debio Wo oa | 300 By Gans Servo Brann Ne| 4200] 2800 (Reumedoy Desa) (Tra Clot ranch) Tesupbs sieve eo | aon By Blanc cl Ne aca} 5600 ToBrancPetandtow Ae] — | _aatca Tam) 138600 iazaca | 1307.40 Branch Accounting br. Branch Debtors Account cr. Dae Para Carma] ben dae Parone cance [Dam TaziiT | ToanrenoT Tae] Tata | Hraa0T8 | By Bane sam | 9200 sisanie | Tobrane Seat zoa0 } 20200 By Branch Sock Me avo | 3000 (Retanet by Cosme) By Discov alowed Ac a0] 00 By Baaos ct 20m | 14700 Eo Team | 7 Dr Branch Profit and Loss Account cr ia Pa Caiatat | Dene) Dae Paria cata [Dam ERIE | ToDaour Aloud Re a Teen) 42400 TaSteag of kA a0 — By Suis Sts Ne =| co Tasrarcrssperces ie | sngn0] 13400 TaGenvalPrtandioesne | 24740] 28700 erProt mea am esa | ae (0) Goods ae st ot plat 50% I encase 100 hn ning 50 nd voi pie = 100+ 50 = 180, “hrf, cot eof opening Hock =€ 160150» 10 of Caleta Branch 12400. (2) eve roof gods set a Caleta Branch = 600/100 150 = € 102,00. (0) Cont pie of cling stk of Cleat Branch = € 1120/10 x 10)= 82520. {€ Cont pe opening soko Dll Rene = €31 200/150 100 = € 20,800 {8 lvoe re of good set a Dal Branch = € 72,0010 150 1,000 (6) Cont pe of cling tsk of Db Branch = € 8400150 10 = 85,00. Mustration 30 ‘BegumpurHaloom Co-operative Lidhas branch in Cuttack, Goods ae invoiced to Cuttack et cost plus 331/3%. Cutack Branch maintains only a Sales Ledger, except tht al other tansactions ae recorded in Head Office book, Branch sells ‘goods both in cash and cre, ll cash collected by Branch i sent to the Hlead Office at regula intervals and all Branch [Expenses are met by the Head Office ‘The following particulars ae elated tothe Cutack Branch fr the accounting your ended Sst December, 2017 z x ‘Sock on et aruny, 2017 24.900. Gro rena Head Ofc dln es) 00 Bronch Dlr et anu, 2017 ‘000 Discount alowed custome, 1800 ‘Goods to Head Oto (Cop) 72.900. Badbobe 400 Branch Sale Cash etn Barch er cosh 2,900 088 20 Cro toa reg 2500 ocd eu by Debs ‘4000 Say ard ober expenses ‘co (ean ‘esewes tom Deters 72.900 Stockon Sa Oncomber, 01 al cot san From the above particulars, prepare inthe books ofthe Head Office: (1) Branch Stock Account (in Double Column); (2) Branch Debtors Account and (3) Branch Profit and Loss Account 1CUB.Com, (Hons) — Adapted) Solution _In the books of Begumpur Handloom Co-operative Ltd (Head Office) Dr. Cuttack Branch Stock Account cr Dae Pare] nvoee Pea] CouPree [| Dae Parca] imvoca Pres] Cost Prce © is @ @ Tai | Tetaereee 24,00 | 16000 [TIDE [By Genser | — 4000 | — 360 stst220tr | To Goods Sarto ‘joao reaca By Banke (Casnsas) | 0an0 | anan0 arch Ae (hate) y Src Deses le foam | e000 Te Brane Debi Ne 4o00 | 4a00 2} Stick Sage Ne ano | 1800 (Reed by eats) (Wote2) ToBanenProitenicas we] —| 2000 By Balance Non) sre | 13200 Taam | eam Tame | TewFinancial Accounting - 17.41 or. Cuttack Branch Debtors Account ae Parti z ate Parcs an? Toast “000 | 3.122017 |B ah Sik A (Gone ready 31322017 | Toran Sock Ate a.o00 ‘By Bark At Cash obec) By Branch Expenses Ae Basis By Banco ct Tao Dr. Cuttack Branch Profit and Loss Account Dae Paras Da Paras SUi22007 | Te Bra Epes Ae SE raa01T | By Bran Soo Ae ‘azo alowed Bas aes Wages Fog ‘Solar and oer oxences To tock Shorage Ale Not) To Geer Profan oss Ne et po) Foo Working Notes (Goods are sent to branch at cost pus 33). Cost of goods Seto beanch = € 72,000, Therefore, invoice pie of gods sent to ranch = € 72,000 (1/3 of € 72,00) =€ 72,0001 £24000 = € 96,00, Goods sero Branch (at vice co) ‘e000 ‘ot Goods eed bye cusomes ‘4000 | 1.24000 Ls: Gods retuned by branch “4000 Less: ash ses ‘000 Less: diss ‘ano | 1.04000 ‘tock tha shoul have been he each tiie pee 2000 Patil tock a ranch ance pre Noe) ‘7.60 Shortage of Sick atnvie rice 2A (8) Cost pie of stock sorage® 1800 wil be charged wo Branch Profit and Loss Aecount Benue its normal in nature (4) tovoce price of losing stock = € 13.200 100% 153.33 = 17.00 Sale of Goods Above / Below Invoice Price ‘Sometimes goods may be sold by the branch below or above the invoice price asa matter of policy, for example, ‘ash sales at invoice price but credit sales at 10% above invoice price. In such a situation, the Branch Stock Account does not balance. For adjusting excess/short amount realised over the invoice price, the following entries are passed: (i) When goods are sold above invoice price Branch Stock Aecount Dr. [Difference between actual selling price ‘To Branch Adjustment Account and invoice price] (ii) When goods are sold below invoice price [Branch Adjustment Account Dr. [Difference between invoice price and ‘To Branch Stock Account actual selling price] Mustration 31 B. Lid, Bombay has a branch in Calcutta, Goods ae sent to Branch at eost plus 50% all figures in) paring stock at rch atic pice 00,000 Deis pid ving th oar ‘19000 Opening debit banc 2011000. Sine shoage (teed ae end be yer at 000 (Goods esse by branch ung yeor 1800000 voce pe Goods in ans tranc (opening) at mice rice [11000 Goods eumedby ranching year (vce pice) 90000, Cash sas dung te yes (©2000 below oke pice) 630,000. Bad dis wits ‘00 Coitsslesanythoyexr @7E0Wzboremecce pice) 1200000 Brand opens ‘om742 Branch Accounting From the above information, you are required to prepare: Branch Stock Account; Branch Adjustment Account and ‘Branch Profit end Loss Account forthe year ended 31st December, 2017, (You may assume that there is sock in transit atthe year-end) Solution In the books of B Ltd, Dr. Branch Stock Account cr ae Paras z Dat Para z AT an,T | TOBARTERRE TOT Dee TY By SHER asl ToT aranh 690900 15y Branch Aine Ne le 2) ‘x.o00 ri 30900 By Branch Denes anno ben 31 Branch eee 1} | 17.7000 By Shetagen Stace (Not 6) ‘000 TaBranc Ausirant Ne (la) 73000 By Goods Seto ranch Ae 000 By Balaoa oe (alr feu) 465000 EAT TDD Dr. Branch Adjustment Account cr ae Params = Dat Paar z TBAT De TY TOBA SHAH Nate BOD | BAT Doc By By Bie SHA NN TET Te Striagosn-Stock Re 20900 By Sek Resre A Poo 20,000 Ta Snes le te 7) 155000 ByGoossSentoBarnAe(Neies) | Seng00 TaGoa Prot oe 640,000 ERO EDT Dr. Branch Profit & Loss Account cr Ta Pare e Dae Pare z ATO | To Epa Ne TT Dae i] By Gow Pa SA Bo de 20,900 Cam npees aoa To ShorgeinSnck Ae Lang) ‘a0 Ta Gora Pot Loss Ae 540,900 BAUD TOT ‘Working Notes (Goods received by branch during the years €18,0,000 1 inches € 30,000 opening stock in trast Therefore, acu goods (2) For ale of pode baw invoice pie, ranch Adjustment Ascot is debited and rach lock Account it rede (3) For ale of pods above ivoie pie, ranch Sock Account tebe and Branch Advuxiert Accout reed {@) Leading of shonage esac debited o Branch Adjustment Account and cos ig debited to Branch Prot and Loss Account Leadig of horage-instock 1/3 of 50,000 2,00 and Cost € 0,000 ~€ 20,000 -€ 40.000 (6) Lead on pai tock inching soods-i-uaasit~ 1/3 of ® (600000 30.00) ~ £2, 10,000. 4) Loading on net gods set to branch daring the year ~ 13 oF (17,70,000 90,000) 5 60,00. 10) Lending on closing tose 1/3 of ® 65,0002 1,35, 000, Mustration 32 ‘White Ltd. with their head office at Kolkata, invoiced goods to their Ranchi branch et 20% less than list pric, which is cost plus 100%, with instruction tat cash sales are made at invoice price and credit sales at ist price. From the following. pariculars, prepare Branch Stock Account and Branch Stock Adjustment Account forthe year ended 31.12.2010 ‘Stack on 16.1201 [tin ee) 2400 Cas received am asters usar Dios en 12010, 2000, Expense abranen tars (Goad recaed tom HO. ava pi) 28400, ‘Renitance 00. a0 (Sees ume oO. 200, Denies on 31122010 eer Shs can 980 Seckon 122010 3520 Creat 20,900 ICUB.Com Hons) — 2011] Solution In the books of White Ltd. Dr. Ranchi Branch Stock Account cr Tai Paras z Date Fane z BAen.7 | Touabreawe Pd a er ca Bee 3 | To Gooos Sertich Ae 2400 By Sark Ale (Can Sa eam TaSupbsinsoa at 1% By Src Dobie Ne soo ToRanai Branch Aiaenen Ae eet) | _—_400 By Sahoo we 3520 TERT oeFinancial Accounting - Il 7.43, Dr. Ranchi Branch Stock Adjustment Account cr ai Pasar. immed Date | Pair = BD OHE HT] To Seek Rese Ne Woe] 505 | Ata Dee By Rah See Sk A eT “aa 9 om alee 3880 By Stack Resse Ae Nae) 00 Tarot Branch PA] By Sus Sek NE Nol 9) ‘5 8 Gents Seat Branch Ne Nae 5) 3825 ar 1470 ‘Working Note (A) Leteost pic be € 100, Theis pice i 100% of cost price. Teer ist prise =€ 100 F100 =€200. The invoice price is 20% devs tha it pie, Le, & 200 ~ 20% of @ 200 =@ 200 ~€ 40 = 16, Cash sles are made at invoice pice, Le, € 16 whoreat sedi sales ae made a Ist pric, ie, € 200. Amount charged on cet sales mae than invoice pice=€206 ~€ 160 = € 46, $i 40/200 10 = 20% oft price {Goods sold on erct= € 20,000 ~ amount charged in exes of invoice pice= 20% of € 20,000 = ¥ 4.000. (2) Ifcom is 10 then invoice rice ie € 160. Therefore, loading om invoice pie = 0 160 100=37 5%. (8) Loading on sulae 375% of 120 4, Ths 8 4 represent loading. Therefor, te credtd to ranch Stok Adjustment ‘Acsount, Th alae ® 15 (120 =45} to be rd to anch Prost nd Loe Acco [See met Mutation (9) Loading on opening stack = 37S of € 2,500 ~€ 900, (5) Loading on goods sent o branch (et) 375% of (25,400 ~200)~¢9.825, (6 Loading on cloning stock 375% of € 3 520~€ 1,320 (7) Expenses at branch of 349 willbe charged to Bratch PL Account Mustration 33 Dara Stores Ltd. with its head office at Delhi, invoiced goods to its branch at Ghaziabad at 20% less than thelist pice whichis cost plus 100%, with instructions that eash sales were tobe made at invoice price snd credit sales at catalogue price (ie. lit pies), From he following particulars available fom the branch, prepare Branch Stock Account, Branch Adjustment Account, Branch Prfit and Loss Account and Branch Debiors Account forthe yea ending Ist December, 2017. (Fgurs in ®) Sek or tt anu 2017 vino) {000 Cash recood ro dios 2ei7 Denso at anany 217 5000, Expenses albanch 3 Soot eee om tod oe (ken pee) 1009. Doblors on St Doerr 2017 288 Sales i) 7300 Stotan Sst Desa 207 frie 9s) 00 Crest 5.000 73000. Romances head soe svic00 Solution In the books of Dara Stores Li. Dr. ‘Branch Stock Account cr. ai Pasar © at Pati z TT en | To BAAR DA ‘000 [BOT Dos] By Ba NE Cah sab 7 (Dee 3 | To Goede Sotto rach Ae 000 By Bach Debios Sco ToBranch Ajsinen Ne (ot 1) ‘0.900 By Shape Soc Ne (Nate 2) 20 By Balance cls p00 200 we Dr. Branch Adjustment Account cr Da Pane z Dat Pate r iT Osc] To Sage ASIK AS NTA 7 [Br Doe 3t]By Banc SR Ae WaT ToD00 TeShek tune Ne ola) 3300 By Steck Rese A Nae 3) 2280 ToGen Pato sa 3) Goods Set Brann Ne Nate 4 24750 Dr. Branch Profit & Loss Account cr Dae ® Date Pate z AT oa | THEA ‘ERT | BT Dos | By Gas Pas HS Te Sheage- nsec Cos as Taal Puit bas 2a [se] aa Dr. Branch Debtors Account cr Da Para z Date Paes z TAT in-T | TOOTS S000 PBT By BARRE TERT (ee 3 | To Grane Sock Ae |__soto0 By Balance ot 12188 E00 35000744 Branch Accounting Working Note: ( Leriki cost price be 100, The ist pies 100% of cost price. Theefre Msrpice~€ 100 -€ 100200. The mvolee rie is 20% es tha i pie, 8 200 = 20% of € 200 = 820 = € 40 = & 160. Cashes ate made at invoie pice, 160 heen ret sles ae ade is pie, ie. & 20, Amount had on reise smote than voice pie 200 160 ~ 40, 07200 x 100 20% of pce. (Gondsodon eet S00, Ama’ charge in exces of vos pris ~ 20% oft ri, 20% of 9.600 ~€ 10.000, (2) feos? 100 then invoice pice ir® 160, Therefore, loading on invoice price ~ 40160 x 100 37 5%, Loading on shortage "37 Safe 200075 Cote 200-8758 15 (2) Lontiog on opening toch = 37 56 0f€ 600 = € 2.250 {0 Loading on goods tent to branch 37-4 af 66,000 —€ (5) Loading on losing stock - 37% 0f€ 5800 -€3,300, Final Accounts System ‘The head office may also prepare a Memorandum Branch Trading and Profit and Loss Account to find out the profit or loss of a branch, apart from preparing the Branch Account. Here, the Trading and Profit and Loss ‘Account is prepared inthe usual manner, afler converting all figures at cost price. The reason for preparing the ‘Memorandum Trading and Profit and Loss Account is to have full information of all transactions which are ignored in Debtors System (discussed earlier) The following points are important: (1) Allitems of Trading and Profit and Loss Account ae to be converted into cost price. (if these are given at invoice price. @) Branch Account will be of a Personal Account in nature. It will show only the mutual transactions between head office and branch, The balance of Branch Account s nothing but net assets ofthe branch atthe end of the accounting year. (3) Branch Trading and Profit and Loss Account is merely a Memorandum Account and, therefore, the entries made therein do not have any double-entry effect. The only object ofthis account isto disclose profit made or loss incurred by the branch, Mlustration 34 1B Co, having its head office at Bombay has a branch at Caleute, You are given the following particulars relating tothe CCateuta Branch forthe year ending 31,12.2017; (ll figures in) ‘Sica rane on 11.2017 15700. ery cashatbeanh on 11.2047 10 ‘ood sri braneh dng 207 4,500. Gao reareaby barca 3900 ‘ol sas tran (reateg€ 18700 fr cash sales) T3320. Cash sent branch er exer: Cosh aie tom dere 52200 Satay: € 1280, Pay Cosn-€260; Ret 3000 Branch cabins on 1.12017 16900. Stodatbranch on 1.122017 a0 ey cap albranch on 1.122017 Cy Prepare Calcuta Branch Account and Memorandum Branch Trading and Profit and Loss Account in the head office Books Solution Inthe books of B Co. Dr. Calcutta Branch Account cr Ta Params z Dai Paro z BAT nT | TOOaRREBE TOT Des i] By Sane Rae) Tar Seek 15700 By Saree (Camclertet fom Debts) | 52200 Dass 16300 8} Goods Seto ranch A 0 Pay cath 0 By Saaoe Doe 3t | To ont srt ranch Ae 4500 ‘ 13900 To Bank Ale Renan): ce) 3300 als 200 Pay Cash 2 Paty Caen 200 ent a0 To Gone Prt Lon Ne 6280 Ta aoFinancial Accounting - Il 7.48 Dr. Memorandum Branch Trading and Profit & Loss Account cr. For the year ended 31st December, 2017 Peers z Paral z To Openrg sok EID [Wy Sa — Cah 1a Toads Santo Bann Ae 45600 Cres seo re Reumaa eA, 3300 | 41700 | By Chsng Steck ‘aoa ToGiessProftes ec) 200 woe ToSaies FZ | By Gross Prot bi ET Token ‘3000 ‘Tobe Expnses (Nats 2} 2a To General Proft Lasse 18280 HO sn ‘Working Notes Dr. (1) Branch Debtors Account or. Date Pane z Dat Peters z TAT nT | TESTER “EG | AT Des St] By Ba Calan pz To Salo erat) 5600 By Slane cs ‘9300 or (2) Petty Cash Account cr Dai Pare = Date Pate z THT A | RARE TD [BOT Dos | By Bare Egeres eal Fg) 70 To Bank Al Renitances) 20 By Salone ce ‘0 arid Bo “atorial Note Account wil be the sas, Mustration 35 7 ude should woe that the profit islote by the Branch Acsount and Branch T ding and Profit and Loss ‘A Caleutta merchant has a branch at Delhi to wiich he charges out the goods at cos plus 25%. The Delhi branch keeps his own sales ledger and transmits al cash received othe head office everyday. Allexpenses ae paid from the head office. The transactions forthe Branch were as follows (all figures Steckon 11.2017 72900 Det on 11.2017 20 Paty cash on 1.2017 0 am alos 5300 South ero arch 2)900 Caleta on age accounts 000 Goode etmodta had oes ‘9 Bact 00 in?) ‘lowareesocusoners sp eters rts 100 Cheques set rac Fort € 1.200, Wages 400 Salas: € 1.00 Stok on 122097 25000 Dettrsor 122017 ‘00 Petycashan 31122017 (rckdeg iseslanovslcome 280 retrertee 59) Prepare the Branch Account andthe Branch Trading and Profit and Loss Account for the year ending 31.12.2017 in the head office books Solution In the books of Head Office Dr. Delhi Branch Account. cr Dae Para z Dat Pate = TT | To Bas TO os BT] By Bak Ne Casha 5300 ‘Soe 2900 By Bank Ac (Calecors) eae Dato 20 8 Geode Soto Branch Ae Ret) 0 Pay cash 20 8 Sk Rosario Ne. 40 ee 3t | 10 Goode Seto ranch Ae 0 8) Goods Sent Bran Ne Nee 2) Tab To Bark Al Renitanes) By Balance ot ert 1am ‘Sock 000 anes ‘a Debs “3000 Ses 1800 Patycan 20 To ShckReenve Ae sam TeGanoalPr 8 Los Ae 19980, Eo wi