Accounting for branches

Содержание

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1st Method: Debtors System NOTES UNDER DEBBTORS SYSTEM: Credit sales are

1st Method: Debtors System
NOTES UNDER DEBBTORS SYSTEM:
Credit sales are not shown

in branch account.
Expenses paid by branch are not shown in branch account b’coz they are adjusted through cash account.
3. Non-cash expenses (dep., bad debts, loss by fire, and loss by theft) are also not shown in branch account because they are adjusted through assets account.
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FORMAT OF BRANCH ACCOUNT: Books of the Head Office Branch Account

FORMAT OF BRANCH ACCOUNT:

Books of the Head Office
Branch Account

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Question.1 (Goel Pg.16.4) Narmada Limited has a branch at Jaipur. Branch

Question.1 (Goel Pg.16.4)
Narmada Limited has a branch at Jaipur. Branch remits

all cash received daily to the Head Office and all expenses of the branch are paid by HO directly. From the following particulars as on 31st December 1994, prepare a Branch Account in the books of the HO.
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SOLUTION: 1 IN THE BOOKS OF HO. (MULTAN) LAHORE BRANCH ACCOUNT

SOLUTION: 1

IN THE BOOKS OF HO. (MULTAN)
LAHORE BRANCH ACCOUNT

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SOLUTION: 1 IN THE BOOKS OF HO. (MULTAN) LAHORE BRANCH ACCOUNT

SOLUTION: 1

IN THE BOOKS OF HO. (MULTAN)
LAHORE BRANCH ACCOUNT

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SOLUTION: 1 IN THE BOOKS OF HO. (MULTAN) LAHORE BRANCH ACCOUNT

SOLUTION: 1

IN THE BOOKS OF HO. (MULTAN)
LAHORE BRANCH ACCOUNT

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Question.2 (Sharma Pg.251) Shashi & Co. of Bikaner has their branch

Question.2 (Sharma Pg.251)
Shashi & Co. of Bikaner has their branch at

Kanpur which sell goods for cash only. The following are the transactions between the HO and Branch Office for the year ending 31st December 2017.
From the following information, prepare Kanpur Branch Account in the HO Books.
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IN THE BOOKS OF Shashi & Co. of Bikaner KANPUR BRANCH ACCOUNT SOLUTION: 2

IN THE BOOKS OF Shashi & Co. of Bikaner
KANPUR BRANCH

ACCOUNT

SOLUTION: 2

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IN THE BOOKS OF Shashi & Co. of Bikaner KANPUR BRANCH ACCOUNT SOLUTION: 2

IN THE BOOKS OF Shashi & Co. of Bikaner
KANPUR BRANCH

ACCOUNT

SOLUTION: 2

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From the following information relating to the Sialkot Branch for the

From the following information relating to the Sialkot Branch for the year ending 31st, March 2007. Prepare the Branch  Account in the books of head office.

Question.3 (zeepedia)

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Solution.3 (zeepedia BRANCH ACCOUNT

Solution.3 (zeepedia

BRANCH ACCOUNT

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Solution.3 (zeepedia BRANCH ACCOUNT

Solution.3 (zeepedia

BRANCH ACCOUNT

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Question.4 (zeepedia) Excellent Garments of Multan has a branch at Lahore.

Question.4 (zeepedia)
Excellent Garments of Multan has a branch at Lahore. Goods are supplied to the branch at cost. The expenses of the branch are paid from Multan and the branch keeps a sales Journal

and the debtors’ ledger only. From the following information supplied by the branch, Prepare the Branch Account in the books of HO.
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Debtors A/C SOLUTION: 4 IN THE BOOKS OF HO. (MULTAN) LAHORE BRANCH ACCOUNT

Debtors A/C

SOLUTION: 4

IN THE BOOKS OF HO. (MULTAN)
LAHORE BRANCH ACCOUNT

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Debtors A/C SOLUTION: 4 IN THE BOOKS OF HO. (MULTAN) LAHORE BRANCH ACCOUNT

Debtors A/C

SOLUTION: 4

IN THE BOOKS OF HO. (MULTAN)
LAHORE BRANCH ACCOUNT

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From the following particulars of a dependent branch. Prepare Branch a/c

From the following particulars of a dependent branch. Prepare Branch a/c showing the profit or loss of the branch  for the year ended 31-12-2007: (all figures are in Rs.)
Opening stock 30,000 Goods sent to branch 90,000
Cash sent by head office: Cash sales 120,000
for salaries

10,000
for other expenses 4,000
Closing stock could not be ascertained but it is know that the branch usually sells at cost plus 20% of the cost.

Question.5 (zeepedia)

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SOLUTION: 5 Working Notes: Calculation for Closing Stock IF 20% IS

SOLUTION: 5

Working Notes: Calculation for Closing Stock IF 20% IS THE PFOFIT
IF COST

+ PROFIT = SALE
IF 100 + 20 = 120

BRANCH ACCOUNT

 

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SOLUTION: 5 Working Notes: Calculation for Closing Stock IF 20% IS

SOLUTION: 5

Working Notes: Calculation for Closing Stock IF 20% IS THE PFOFIT
IF COST

+ PROFIT = SALE
IF 100 + 20 = 120

BRANCH ACCOUNT

 

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Prepare Branch a/c from the following particulars. Branch makes only cash

 
Prepare Branch a/c from the following particulars. Branch makes only cash sales.
Goods supplied to

branch 50,000
Expenses 3,000
Cash Sales 55,000
Opening stock 1,000
Closing stock has not been ascertained. Manager gets commission @ 10% on net profit before charging such commission.
Branch sells goods at cost + 25%.

Question.6)

(Sharma Pg 252

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SOLUTION: 6 BRANCH ACCOUNT Working Notes: Calculation for Closing Stock IF

SOLUTION: 6

BRANCH ACCOUNT

Working Notes: Calculation for Closing Stock IF 25% IS THE PFOFIT
IF

COST + PROFIT = SALE
IF 100 + 25 = 125

 

Op. stock + Goods sent ­-Cl. stock  = Cost of sales 1,000  + 5,000 ­ - X = 44,000
X  (closing stock)  = 51,000 -­ 44,000
X  (closing stock)  =  7,000(1)

 

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SOLUTION: 6 BRANCH ACCOUNT Working Notes: Calculation for Closing Stock IF

SOLUTION: 6

BRANCH ACCOUNT

Working Notes: Calculation for Closing Stock IF 25% IS THE PFOFIT
IF

COST + PROFIT = SALE
IF 100 + 25 = 125

 

Op. stock + Goods sent ­-Cl. stock  = Cost of sales 1,000  + 5,000 ­ - X = 44,000
X  (closing stock)  = 51,000 -­ 44,000
X  (closing stock)  =  7,000(1)

 

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Question.7 Prepare Branch A/C under debtor system with the following information:

Question.7
Prepare Branch A/C under debtor system with the following information:

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Branch A/C Debtors Account Structure.7

Branch A/C

Debtors Account

Structure.7

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Branch A/C Debtors Account Solution.7

Branch A/C

Debtors Account

Solution.7

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Question.8 (Goel Pg.16.7) Ali garments has a branch at Makkah. All

Question.8 (Goel Pg.16.7)
Ali garments has a branch at Makkah. All

cash received by the branch is daily remitted to the HO and all expenses are paid by the HO. Prepare branch a/c in the books of HO from the following particulars as on 31st December 1994.
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Makkah Branch A/C for the year ending 31st December, 1994 Debtors Account STRUCTURE: 8

Makkah Branch A/C
for the year ending 31st December, 1994

Debtors Account

STRUCTURE: 8

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Makkah Branch A/C for the year ending 31st December, 1994 Debtors

Makkah Branch A/C
for the year ending 31st December, 1994

Debtors Account

SOLUTION: 8

Working

Notes:
1. Goods sent by HO to the branch:
Goods received by branch 160000
Add: Goods in transit 5,000
1,65,000
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NOTES UNDER DEBBTORS SYSTEM: Credit sales are not shown in branch

 
NOTES UNDER DEBBTORS SYSTEM:
Credit sales are not shown in branch account.
Expenses

paid by branch are not shown in branch account because they are adjusted through cash account.
3. Non-cash expenses (dep., bad debts, loss by fire, and loss by theft) are also not shown in branch account because they are adjusted through assets account.

1st Method: Debtors System

Revision

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FORMAT OF TRADING AND P & L ACCOUNT

FORMAT OF TRADING AND P & L ACCOUNT

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Question.9 (Same question No.7) Prepare Branch A/C under Final Account system

Question.9 (Same question No.7)
Prepare Branch A/C under Final Account system

with the following information:

SOLUTION 9 (Final Account Methods)
Branch Trading & Profit and Loss A/C

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Question.9 (Same question No.7) Prepare Branch A/C under Final Account system

Question.9 (Same question No.7)
Prepare Branch A/C under Final Account system

with the following information:

SOLUTION 9 (Final Account Methods)

Branch Trading & Profit and Loss A/C

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SOLUTION 10: HOME ASSIGNMENT (1) IN THE BOOKS OF HO. (JEDDAH)

SOLUTION 10: HOME ASSIGNMENT (1)

IN THE BOOKS OF HO. (JEDDAH)
MADINA

BRANCH ACCOUNT
(for the year 1987)

BRANCH DEBTORS ACCOUNT
(to calculate the closing balance of debtors)

SOLUTION OF HOME ASSIGNMENT (1)

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Question 10 (HOME ASSIGNMENT No.1) Almarai company has its HO at

Question 10 (HOME ASSIGNMENT No.1)
Almarai company has its HO at

Jeddah and branch at Madina. The branch sells for cash as well as credit. With the help of the following transactions which took place between HO and Branch Office in the year 2017: Prepare Branch Account and Debtors Account in the books of HO.
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2nd Method: Stock and Debtors System 1 This methods can be

2nd Method: Stock and Debtors System
1 This methods can be followed only

if goods have been sent at loaded price (invoice price) not at cost price.
2. Following Basic accounts are prepared:
1. BRANCH STOCK ACCOUNT:
It is prepared at loaded price.
2. BRANCH DEBTORS ACCOUNT:
This account is prepared only if goods have also been sold on credit basis.
3. BRANCH EXPENSE ACCOUNT:
It is an optional account.
4. BRANCH ADJUSTMENT ACCOUNT: (Load is transferred)
It is prepared to calculate Gross Profit / Gross Loss during the year. It is prepared with the help of Branch Stock Account. In this account we reverse profit margin of each and every item appearing in Branch Stock Account (except sales and sales return). Balancing figure will be called Gross Profit (debit side) or Gross Loss (Credit Side) during the year.
5. BRANCH P&L ACCOUNT:
It is prepared to calculate Net Profit / Net Loss earned during the year. In this account we debit all expenses of branch paid by Head Office or by Branch or Non-Cash expenses. Balancing figure will be called Net Profit (debit side) or Net Loss (Credit Side) during the year.
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Question: 11 Head Office sends goods to its branch at cost

Question: 11
Head Office sends goods to its branch at cost +

25%.
From the following information prepare necessary accounts under Stock and Debtors System.
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SOLUTION 11: IN THE BOOKS OF HO. (+) BRANCH STOCK ACCOUNT

SOLUTION 11:

IN THE BOOKS OF HO.
(+) BRANCH STOCK ACCOUNT

(-)

(+) BRANCH DEBTORS ACCOUNT (-)

Cont.

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SOLUTION 11: IN THE BOOKS OF HO. (+) BRANCH STOCK ACCOUNT

SOLUTION 11:

IN THE BOOKS OF HO.
(+) BRANCH STOCK ACCOUNT

(-)

(+) BRANCH DEBTORS ACCOUNT (-)

Under Stock and Debtors System, we have to make following accounts:
1. BRANCH STOCK ACCOUNT (for Stock)
2. BRANCH DEBTORS ACCOUNT (for Load of Profit)
3. BRANCH ADJUSTMENT ACCOUNT (for Gross Profit)
4. BRANCH P & L ACCOUNT (for Net Profit)
5. BRANCH EXPENSE ACCOUNT ( Optional)

Cont.

Cost = 100
Load = 25
Invoice Price =125

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BRANCH ADJUSTMENT ACCOUNT (with the help of branch stock account) BRANCH P&L ACCOUNT

BRANCH ADJUSTMENT ACCOUNT (with the help of branch stock account)

BRANCH

P&L ACCOUNT
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BRANCH ADJUSTMENT ACCOUNT (with the help of branch stock account) BRANCH P&L ACCOUNT BRANCH STOCK ACCOUNT

BRANCH ADJUSTMENT ACCOUNT (with the help of branch stock account)

BRANCH

P&L ACCOUNT

BRANCH STOCK ACCOUNT

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Question: 12 Prepare a branch a/c , branch adjustment a/c and

Question: 12
Prepare a branch a/c , branch adjustment a/c and

P& L a/c from the following information. HO sends goods to branch with 25% profit on cost
Prepare aforesaid accounts under stock and debtors system.

Note :- Condition 1,
Treatment of Abnormal Loss (A/L):
Load of A/L is debited to Branch Adjustment A/C and Cost of A/L is debited to branch P&L A/C.

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SOLUTION:12 (A/L) IN THE BOOKS OF HO. (+) (1) BRANCH STOCK

SOLUTION:12 (A/L) IN THE BOOKS OF HO.
(+) (1) BRANCH STOCK

ACCOUNT (-)

2. BRANCH ADJUSTMENT ACCOUNT (with the help of branch stock account)

3. BRANCH P&L ACCOUNT

Working Notes:

I. Load of Abnormal Loss =
=

II. Cost of Abnormal Loss =
=

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SOLUTION:12 (A/L) IN THE BOOKS OF HO. (+) BRANCH STOCK ACCOUNT

SOLUTION:12 (A/L) IN THE BOOKS OF HO.
(+) BRANCH STOCK ACCOUNT

(-)

BRANCH ADJUSTMENT ACCOUNT (with the help of branch stock account)

BRANCH P&L ACCOUNT

Working Notes:

1. Load of Abnormal Loss = (12,000× 25/125 )
= 2400 (Load of Abnormal Loss)

2. Cost of Abnormal Loss = (12,000× 100/125 )
= 9600 (Cost of Loss)

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Condition2, Treatment of Normal loss (N/L): IP (invoice price = LOAD

Condition2, Treatment of Normal loss (N/L):
IP (invoice price = LOAD

+COST) of N/L is debited to Branch Adjustment A/C.
Question: 13 (Santosh Kumar CA)
Prepare a branch Stock a/c , branch adjustment a/c and P& L a/c from the following information. HO sends goods to branch with 25% profit on cost
Prepare aforesaid accounts under stock and debtors system.
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SOLUTION:13 (Normal Loss) IN THE BOOKS OF HO. (+) BRANCH STOCK

SOLUTION:13 (Normal Loss) IN THE BOOKS OF HO.
(+) BRANCH STOCK

ACCOUNT (-)

BRANCH ADJUSTMENT ACCOUNT (with the help of branch stock account)

BRANCH P&L ACCOUNT

Working Notes:

1. Load of Abnormal Loss = (12,000× 25/125 )
= 2400 (Load of Abnormal Loss)

2. Cost of Abnormal Loss = (12,000× 100/125 )
= 9600 (Cost of Loss)

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Sample questions

Sample questions

Слайд 47

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