Branch Accounting

RZG-594/A, RAJ NAGAR –  II, PALAM COLONY-45  “Way to Leading Professionals” 

Prepared by- Rupanter Aggarwal  Mob. No. 9645610182 

BRANCH ACCOUNTS Q.1 P and Co. of Chennai sends goods to its branch at Hyderabad at cost. cost. The branch sells goods for for cash and credit. All the proceeds realized by the branch are sent to head office and expenses met met by the head head office, except except petty in this regard. The branch keeps a Sales Journal and Debtor’s ledger only. The following is the list of transactions between the head office and the Branch for the month ending 31 March: Opening balances: Stock Debtors Petty Cash Goods sent to branch during the year Goods retuned by the branch Cash Sales Cash received on ledger accounts Goods returned by the debtors Discount allowed Bad debts Branch expenses met by the H.O. Salaries and wages Rent and rates Telephone Others Cash sent to branch for petty cash Closing balances at branch: Stock Debtors Petty Cash

Rs. 5,000 3,500 150

Rs.

8,650 40,000 2,500 15,000 33,000 3,000 1,000 1,500

5,000 3,000 1,000 1,500

10,500

9,000 6,000 100

15,100

prepare Hyderabad Branch Account and Goods sent to Branch Account In the books of H.O.

Q.2. ABC Ltd. Invoiced goods at cost to its branches situated in West Bengal. Bengal. The branches sell goods on credit as well well as for for cash. From the following details relating to Kolkata branch, prepare a branch account to ascertain profit or loss at the branch:

Goods received from ABC Ltd. Goods returned to ABC Ltd. Cash sales Credit sales Allowances to customers General trade charges Returns from customers Bad debts Discounts allowed to customers Cash received from debtors Rent and rates Wages and salaries Stock: Opening Closing

Rs. 25,400 350 16,500 30,000 150 650 300 300 1,200 24,600 900 3,000 13,100 6,950

Q. 3. From the following transactions relating to Lucknow branch, prepare a branch account in the Bombay head office. office. All expenses are paid by the branch as per arrangement with the head office: Balances (1 April 20-1) Branch Stock (at cost to H.O.) Branch Debtors Personal Computer Branch Bank Balances (31 March 20-2): Branch Debtors Branch Bank Personal Computer Branch Stock (at cost to H.O.) Transactions at branch during the year: Goods transferred to branch (at cost to H.O.) Goods returned to H.O. by branch (at cost to H.O.) Cash sales paid into bank Credit sales Sales returns at selling price Cheques received from customers for credit sales

Rs. 3,78,000 1,35,500 45,000 9,650 ?  ?  ?  2,70,000 7,62,000 15,000 1,56,000 8,25,000 3,750 8,45,000

Discount allowed Bad debts written off  Aggregate amount of cash transferred from branch bank to H.O. bank Account during the year on month-wise basis Rent and rates Wages General expenses Transactions at H.O on behalf of branch during the year: Goods transferred to branch 9at cost to H.O.) Goods returned from branch (at cost to H.O.) Cash received from branch Salaries of branch staff 

7,800 1,500

8,95,000 56,000 45,000 7,630

 As above  As above  As above 1,52,500

Provide depreciation at 20% p.a. on personal Computer. Q.4. Calculate the invoice price of the goods sent to branch and the profit margin included therein: (i) (ii) (iii) (iv) (v) (vi)

Goods amounting to Rs. 2,00,000 at cost are sent to the branch at cost plus 20%. Goods costing Rs. 1,50,000 are invoiced to branch at 30% above cost. Goods costing Rs. 2,50,000 are sent to branch at 120% of the cost price to head office. Goods costing Rs. 4,20,000 are invoiced to branch to give grass margin of 40% on sale. Goods sent to branch (at cost to branch) Rs. 3,60,000 have been invoiced at 20% above the cost Goods received from head office Rs.1,20,000. Goods-intransit Rs. 20,000. Goods are invoiced at cost + 40%.

Q.5. A head office office in Mumbai has has a branch I Delhi to which which goods are invoiced by the head office at cost plus 25%. Prepare Branch Account in the books of head office from the following particulars:

Opening Stock Rs. 12,500; Opening Debtors Rs. 12,000; Goods Received from Mumbai Rs. 40,000; Cash Sales Rs. 16,000; Cash Received from Debtors Rs. 29,500; Goods returned to H.O. Rs. 2,000; Cash Received from Expenses Rs. 14,500; Stock at the end Rs. 15,000; Debtors at the end Rs. 22,500. Q. 6. X Company has a branch at Delhi. Goods are invoiced form Head Office at cost plus 33 1/3. Find out profit at the branch according to Debtors System. Opening Balances: Debtors Petty Cash Furniture Stock (I.P) Cash sent by Head Office for Petty Expenses Branch Expenses and Losses: Freight and Advertisement Bad debts Depreciation on Furniture Petty Expenses Sales: Cash Credit Goods returned by Debtors Goods returned by Branch to Head Office Cash received from Debtors Stock at the end at I.P Goods invoiced by Head Office during the year

Rs. 10,000 1,000 2,000 8,000 2,000 5,600 50 80 1,500 50,000 3,600 800 2,000 20,000 7,800 88,000

Q.7. Modern shoe Stores has an old established Branch at Chandigarh. Goods are invoiced to the branch at 20% profit on sales, the Branch having been instructed to sent all cash daily to the head head office. All expenses expenses are paid by the head office except petty are required to draw up branch account as it would appear in the books of the head Office, i.e., Modern shoe Stores:

stock on Jan 1, 2002 (Invoice Price) sundry Debtors on Jan 1, 2002 Cash in hand on Jan 1, 2002 Office furniture On Jan 1, 2002 Goods supplied by the Head Office (Invoice Price) Goods Returned to Head Office Cash received from Debtors Cash Sales Credit Sales Discount Allowed Expenses Paid by the Head Office: 1,200 Rent Salary 2,400 Stationery and Printing Petty expenses paid by the Branch Manager Provide depreciation on furniture @ 10% p.a. Rent outstanding Stock on 31.12.2002 (Invoice Price)

Rs. 15,000 9,000 400 1,200 80,000 1,000 80,000 1,000 480 30,000 50,000 30,000 300 3,900 280 500 14,000

Q.8. Anderson Anderson bros., Chennai Chennai has a branch at Agra. Agra. All goods goods required for sale at Agra and supplied from Chennai at cost plus 25% and all cash received at the branch is banked daily in the Head Office Account opened opened in a bank at Agra. From the following following particulars, give Branch Account, branch Debtors Account:

Stock (1.1.1999) Debtors (1.1.1999) Petty Cash (1.1.1999) Goods invoiced to

Rs. 7,900 Cash Sales 11,300 Reserve for bad and 90 doubtful debts Return from Debtors

Branch Returned goods to H.O. Bad debts Allowance given Petty cash expenses Stock 31.12.1999 Debtors 31.12.1999

25,000 1,000 100 450 240 8,400 19,510

Branch expenses Paid By H.O. Rent Salary Sundries Total sales Remittance to Branch for Petty Cash

Rs. 1,400 1,500 400

1,400 1,500 700 34,900 280

Q.9. Shri X has a retail retail branch at Allahabad. Allahabad. Goods are sent sent by the Head Office to the branch marked at selling price which is cost plus 25%. All the expenses of the branch are paid by the Head Office. All cash collected collected by the Branch (from customers and from cash sales) is deposited to the credit of H.O. From the following particulars of the Branch, prepare Branch Stock Account, Branch Debtors Account, Branch Expenses Account and Branch Adjustment Account in the books of the Head Office: Debtors on 1.1.1999 Debtors on 31.12.1999 Inventory with the Branch at Invoice Price: On 1.1.1999 On 31.12.1999 Cash sales during the year Total amount deposited in the H.O. account during the year Returned goods to H.O. at Invoice Price Salaries paid Rent paid Discount allowed to customers Bad Debts written Spoilage

Rs. 12,000 14,000 16,000 17,000 60,000 1,27,000 5,000 6,000 4,000 2,000 1,000 2,000

Q.10. Agra head office supplies goods to its branch at Alwar at invoice price which is cost Plus 50%. All cash received by the branch is remitted to Agra and all branch expenses are paid by the head office. From the following particulars related to Alwar branch for the year 1999 prepare Branch Debtors Account. Branch Stock Account and Branch Adjustment Account in the books of the head office so as to find out the gross profit and net profit made by the branch: Stock with Branch on 1-1-1999 (at invoice price) Branch Debtors on 1-1-1999 Petty cash balance on 1-1-1999 Goods received from head office (at invoice price) Goods returned to Head office Credit Sales Rs. 87000; Sales Returns

Rs. 66,000 22,000 500 2,04,000 6,000

Rs. 3000; Cash Sales Rs. 106000 Allowance to customer on Selling Price (already adjusted while invoicing) Cash received from debtors Discount allowed to Debtors Expenses (Cash Paid by Head Office): Rent Rs. 2400; Salaries Rs. 24000 Petty Cash Rs. 2000 Stock with Branch on 31-12-1999 (at invoice price) Petty Cash Balance on 31-12-1999

2,000 93,000 2,400

69,000 100

Q.11. Onkar Corporation Ltd. has two branches- one at Jaipur and another at Lucknow. Goods are invoice to branches at cost plus 50%. Branches remit all cash received to Head Office and all expenses are met by the H.O. From the following particulars, prepare the necessary accounts on the ‘stock and Debtors system’ to show the profit earned at the Jaipur Branch: Stock on 1 Jan, 1997 Debtors on 1 Jan, 1997 Goods sent to branch (at cost) Sales at Branch Cash Credit Cash collected form Debtors goods returned by Branch to Head Office Goods transferred from Lucknow Branch to Jaipur Branch Shortage of stock Shortage of Stock at Branch Discount allowed to customers Expenses at Branch

Rs. 9,300 6,800 34,000 25,010 31,000 30,400 1,200 1,500 2,100 450 200 5,400

Q.12. VS & Co. of Hyderabad have a branch at Warangal. All purchases are made by the head office and goods sent to branch are invoiced at selling price which which is 20% above above cost. All sales by

the branch are on credit credit terms. Branch expenses expenses are paid by the head office and all cash received by the branch is remitted to the head office. office. All branch trisections trisections are recorded in the head office books. The balance relating to the the branch in the Head Head Office Office Ledger on 1.1.1994were as follows: Branch Stock Account (Invoice Price) Branch Debtors Account Transactions during the year to 31.12.1994 were Goods sent to branch at Invoice Price Returns form branch to head Office at invoice Price Cash received form Debtors discount allowed to Debtors Branch Expenses paid by head office Branch Stock Account (Invoice Price) 31.12.1994 Branch Debtors 31.12.1994

Rs. 36,000 25,750 3,24,600 6,420 3,10,000 5,750 30,000 48,180 10,000

Prepare in the head office books (a) Branch Stock Account, (b) Branch Debtors Account, (c) Branch Expenses Account and (d) Branch Adjustment Account. Q.13. Delhi head office supplied goods to its branch at Kanpur at invoice price price which is cost plus 50%. All cash received by the branch is remitted to Delhi and all branch expenses are paid by the head office. From the following particulars relating to Kanpur branch for the year 1996, prepare Branch stock Account, Branch Debtors Account, Branch Expenses Account and Branch adjustment Account in the books of the head office so as to find our to gross profit made by the branch: Stock with Branch on 1.1.1996 (at invoice price) Branch Debtors on 1.1.1996 Petty Cash balance 1.1.1996 Goods received from head office (at invoice price) Goods returned to head office Credit sales less Returns Cash received form Debtors Discount allowed to Debtors Expenses (cash paid by head office) 2400 Rent 24000 Salaries 1000 Petty Cash Cash Sales

Rs. 60,000 12,000 100 1,86,000 13,000 86,000 90,000 2,400

27,400 1,04,000

Stock with Branch on 31.12.1996 (at invoice price) Petty Cash balance on 31.12.1996

54,000 100

Q.14. A Kolkata firm invoices goods to its branch at Mumbai at cost  plus 50%. From the following particulars prepare Branch Stock Account and Branch Adjustment Account as they would appear in the books of Head office: Stock at the commencement at branch at invoice price Stock at close at branch at invoice price Goods sent to branch during the ear (including goods invoiced at Rs. 100000 to Branch but not received by branch before to close of the year) Return of goods to head office by customers of the branch Credit sales at branch Cash sales at branch Invoice value of goods pilfered

Rs. 7,50,000 6,00,000

50,00,000 2,50,000 45,00,000 2,50,000 50,000 75,000

Normal loss at branch due to wastage etc. The head office closes its books on 31 March 2004. Q.15.Johnson & Co. branch a Kolkata. Goods are invoiced to to the branch at cost Plus Plus 25%. Branch is instructed to to deposit deposit cash everyday in the head office office account account with the bank. All expenses expenses are paid by cheques by the head office except petty cash expenses which are paid by the branch manager. From the following particulars, prepare branch account in the books of head office:

Stock on 1 April, 2006 Stock on 31 March, 2007 Sundry debtors on 1 April, 2006 Sundry debtors 31 March, 2007 Cash sales for the year Credit sales for the year Cash remitted to the head office Furniture purchased by the branch manager Goods invoiced from the head office Expenses paid by the head office Expenses paid by the branch

Rs. 2,500 3,000 14,000 1,800 10,800 700 15,000 1,200 18,200 1,640 120

Q.16. A trader has a branch at Kolkata to which goods are invoiced at cost plus 20%. Prepare a Branch Account in H.O. books from the following:

Opening stock at branch Cash sales at branch Credit sales Collection from debtors Goods received from H.O. Branch expenses: Paid by H.O. Paid by branch Expenses unpaid Closing stock at branch Closing balance of debtors Goods-in-transit Goods-in-transit from H.O.

Rs. 24,000 17,500 41,000 37,900 30,000 3,000 6,000 1,400

10,400 18,000 9,160 3,600

Q.17. Goldie Ltd. invoices goods to its branch at selling price which is cost plus 60%. from the following particulars, prepare branch account for the year indeed 31 March, 2007:

Stock at branch on 1 April, 2006 at invoice price Branch debtors on 1 April, 2006 Branch furniture on 1 April, 2006 Transactions during the year 2006-2007: Invoice price of goods sent to branch Cash sales at branch Credit sales at branch Cash expenses for the branch directly met by Head Office Discount allowed to branch debtors Bad debts written off  Stock at branch on 31 March, 2007 at invoice price Branch debtors on 31 march, 2007 Spoiled goods written off at invoice price

Rs. 2,40,000 2,13,750 2,00,000 31,20,000 21,60,000 6,24,000 1,62,600 6,000 3,750 3,36,000 1,08,000 500

Depreciate furniture @ 15% per annum. Q. 18. Rohit Rohit and Co. Co. of Delhi Delhi as a branch at Bhivani. Goods are invoiced to the branch at cost plus 25%. The branch does not not

maintain account books and all reimbursed by the head office. From the following particulars, prepare the branch account in the book of head office for six months ending 30 September, 2007:

Stock on 1.4.07(at cost to head office) Debtors on 1.4.07 Furniture on 1.4.07 Petty cash on 1.4.07 Transactions for six months: Goods received from head office (at invoice price) Cash sales Credit sales Goods returned to head office(at invoice price) Normal loss Sales returns by customers to branch Cash received from debtors Bad debts Trade discount to customers (already taken into account while invoicing as promotional expenses) Bill receivable received from customers at branch Goods sent to branch on 27.9.07, received by Branch on 5.10.07: Cash sent to branch for expenses Cash discount allowed customers Balances on 30.9.07 Stock Debtors Petty cash

Rs. 55,000 15,000 12,000 500 2,25,000 1,95,000 80,000 12,750 1,000 500 50,000 400 12,000 15,000 1,500 10,500 800 5,600 ?  500

Q. 19. Gupta and Sons, Delhi Delhi has a branch at Bulandshar. Goods are invoiced at cost plus 25% at which the branch sells them. From the following, prepare Branch Stock Account and Branch Profit and Loss Account for the year ended 31 December, 2006: Balances on 1 Jan, 2006 Branch stock at on voice price Branch debtors Branch cash Transactions during 2006 Goods invoiced to branch Goods returned by branch to head office Credit sales at branch Cash sales at branch

Rs. 12,500 8,500 2,000 1,62,500 6,250 87,500 51,250

Cash received from debtors at branch Bill receivable received from debtors at branch Amount received by branch on discounting of the Above mentioned bill receivable Cash sent to branch for expenses Actual cash expenses at branch Shortage of stock at branch at invoice price Cash discount allowed to branch customers Balance as on 31 December, 2006 Branch stock Branch debtors Branch cash

78,650 5,000 4,900 18,000 17,950 75  390 ?  ?  4,500

Also prepare Branch Account under Debtors’ System.

Show all working noted clearly. Q.20. ESS KAY Ltd. of Kolkata Kolkata invoices invoices goods to its branch at Mumbai cost cost plus 33-1/3 percent. percent. from the following particulars, prepare the branch stock account and the branch profit and loss account as they would appear in the books of H.O.:

Stock at commencement at Branch at invoice price Stock at close at Branch at invoice price Goods sent to branch during the year at invoice price (Including goods invoiced at Rs. 10,000 to Branch on 31.3.2006 but not received by Branch before close of year). Returns of goods to H.O. (invoice price) Credit sales at branch Cash sales at branch Invoice value of goods pilfered Normal loss at branch due to wastage and deterioration of  stock (invoice value)

Rs. 75,000 60,000 5,00,000 25,000 4,50,000 25,000 5,000 7,500

Q.21. Mr. X has a branch at Delhi and Hardwar and the goods are invoiced at a profit of of 20% on sales. sales. Following information is available of the transactions at Delhi branch for the year ending 31 March 2008:

Stock at invoice price

 As on 1.4.2007   As on 1.4.2008 Rs. Rs. 40,000 ? 

Debtors Petty cash Transactions during 2007-08 Goods sent to branch at invoice price Goods returned to H.O. Cash sales Credit sales Normal loss at invoice price Goods pilfered at invoice price Goods lost by fire at invoice price Insurance company paid to H.O. loss by fire at Delhi Cash sent for petty expenses Bad debts at Delhi branch goods transferred to Hardwar branch under instructions from H.O. Insurance charges paid by H.O. Goods returned by debtors

12,000 150

11,000 250 4,20,000 15,000 1,05,000 1,80,000 350 3,000 4,000 3,000 32,000 400 12,000 200 500

Q.22. Hindustan industries, Mumbai has a branch in Cochin to which office office goods goods are invoiced at at cost 25%. The branch sells both for cash and on credit; branch expenses are paid direct from the head office and branch has to remit all cash received into head office bank account at Cochin. Cochin. From the following following details, relating to calendar year 2006, prepare the account in the Head office ledger and ascertain the Branch profit by the following Stock and Debtors system. system. Branch does not maintain any books of accounts but sends weekly returns to the Head office: Rs. Goods received from head Office at invoice price Returns to head office at invoice price Stock at cochin at 1 Jan 2006 Sales: Cash Credit Sundry debtors on 1 Jan 2006 Cash received from debtors

6,00,000 12,000 60,000 2,00,000 3,60,000 72,000 3,20,000

Rs. Discount allowed to 6,000 Debtors 4,000 Bad Debts Sales returns to Cochin 8,000 branch Rent, Rates, Taxes at 18,000 branch Salaries, Wages, Bonus 60,000 at branch 6,000 Office expenses Stock at the end at 1,20,000 Invoice price

Q.23. Delhi head office supplies goods to its branch at Kanpur at invoice price which is cost plus 50%. All cash received by the branch is remitted to Delhi and all branch expenses are paid by the head offices. offices. From the following following particulars related related to Kanpur Kanpur branch for the year 2006, prepare— prepare— (i) Branch Account, and (ii) Branch Stock Account, branch debtors account, branch expenses account and branch adjustment account in the books of the head office so as to find out the Gross profit and Net Profit made by the Branch.

Stock with branch on 1.1.06(at invoice price) Branch debtors on 1.1.06 Petty cash balance on 1.1.06 Goods received from head office (at invoice price) Goods returned to head office Credit sales less returns Allowance to customers of selling price (already adjusted while invoicing) Cash received from debtors Discount allowed to debtors Expenses (cash paid by Head Office): Rent Salaries Petty cash Cash sales Stock with branch on 31.12.06 (at invoice price) Petty cash balance on 31.12.2006

Rs. 60,000 12,000 100 1,86,000 3,000 84,000 2,000 90,000 2,400 2,400 24,000 1,000

27,400 1,04,000 54,000 100

Q.24. Rahul ltd. operates a number of retail outlets to which goods are invoiced at whole sale price which is cost plus 25%. These outlets sell the goods at the retail price which is wholesale price plus 20%. Following is the the information regarding one of the outlets for the year ending 31 March 1997:

Stock at the outlet 1.4.06 Goods invoiced to the outlet during the year Gross profit made by the outlet

Rs. 30,000 3,24,000 60,000

Goods lost by fire Expenses of the outlet for the year Stock at the outlet 31.3.07

?  20,000 36,000

You are required to prepare the following accounts in the books of Rahul Ltd. for the year ended 31.3.07: (i)Outlet Stock Account (ii) Outlet Profit and Loss Account (ii)Stock Reserve Account. Q.25. B.S. Ltd. operates operates a retail branch at Ranchi. All purchases are made by the head office at Kolkata, goods for the branch being delivered to it direct and charged out at selling price which is cost price Plus 50%. all cash received received by the branch branch is remitted to Kolkata. Branch expenses are paid by the branch out of an impreset amount which is reimbursed by Kolkata Kolkata monthly. The branch transactions are recorded in the books of the Kolkata office. On 1 Jan 2008, stock in trade at the branch, at selling price, amounted to Rs. 48,660 and debtors to Rs. 6,440. During the year ended 31 December 2008, the following transactions took place at the branch:

Goods received by branch at selling price Cash sales Credit sales Goods returned to Kolkata at selling price Reduction in selling price authorized by H.O. Cash received from debtors Debtors wirttern off as irrecoverable cash discounts allowed

Rs. 1,21,800 64,150 51,280 1,560 970 42,660 650 1,120

A consignment of goods dispatched to branch in December 2008 at a selling price of Rs. 1,200, was not received by the branch until Jan 6, 2009 and had not not been included in the stock figure. The expenses relating to the branch for the year ended 31 December 2008 amounted to Rs. 17,290. On 31 December 2008, physical stock at branch, at selling price amounted to Rs. 52,200.

you are required to write up the Branch Stock Account Maintained in Kolkata books to prepare the Trading and Profit and Loss Account of the branch for the year ended 31 December 2008. Q.26. The following information and particulars relate to New Delhi branch for the year 2006-07:

Stock Debtors Petty cash

31.3.06 50,000 70,000 250

31.3.07  75,000 95,000 120

Goods costing Rs. 5,50,000 were sold by the branch @ 25%, on cost; cash sales sales amounted amounted to Rs. 1,50,000 and and the rest credit sales. sales. Branch spent Rs. 30,000 for salaries Rs. 12,000 for rent and Rs. 8,000 for petty expenses. All expenses expenses were remitted remitted by H.O.. H.O.. Branch receives receives all goods goods from H.O. You are requested to show the New Delhi Branch Account in the books of head office for the year 2006-07 and prove your answer by preparing a Branch Trading and Branch Profit and Loss Account. Q.27. A head office sends goods to its branch at cost  plus 80% Goods are sold to customers at cost  plus 100%. From the following particulars ascertain the profits made at the Head Office:

Stock Purchases Goods sent to Branch (Invoice price) Sales

H.O. Rs. 20,000 2,00,000 90,000 2,70,000

Branch Rs. 90,000

Note: Sales at the H.O. are made at whole sale basis. Q.28. A Kolkata firm whose accounting year ends on 31 December has two branches-one at Agra and other at Banaras. The branches keep keep a complete complete set set of books. On 31 December, 2008, the Agra and the Banaras branch accounts in Kolkata office books

showed debit balances of Rs. 30,450 and Rs. 45,000 respectively before taking the following information into account: (a) Goods valued Rs. 2,000 were transferred from Agra to Banaras under instructions from head office. (b) The Agra branch collected Rs. 2,500 from an Agra customer of the head office. (c) The Banaras branch paid Rs. 5,000 for certain goods purchased by the head office in Banaras. (d) Rs. 5,000 remitted by the Agra branch to Kolkata office on 29 December 2008 were received on 3 Jan following. (e) The Banaras branch received on behalf of the head office Rs. 1,500 as dividend from a Banaras company. (f) For the year 2008 the Agra branch showed a net loss of Rs. 1,250 and the Banaras branch a net profit of Rs. 5,400. Pass journal journal entries to record these matters in the head office books and write up the two branch accounts therein. Q.29. A Kolkata H.O. passes one entry at the end of each month to adjust the position arising out of inter-branch transactions during the months. From the following enter-branch enter-branch transactions transactions in April 20…, make the entries in the books of Kolkata Head Office: (give details of the workings) (a)Delhi Branch (i) Received goods from Nagpur branch Rs. 9,000 and Ahmadabad branch Rs. 6,000. (ii) Sent goods to Ahmadabad branch Rs. 15,000 and Nagpur branch Rs. 12,000. (iii) Received bills receivable from Ahmadabad from Ahmadabad branch Rs. 9,000. (iv) Sent acceptances to Nagpur branch Rs. 6,000 and Ahmadabad branch Rs. 3,000. (b) Kanpur Branch (In addition to [a] above): (i) Received goods from Nagpur Branch Rs. 15,000 and Delhi branch Rs. 6,000. (ii) Cash sent to Nagpur branch Rs. 3,000 and Delhi branch Rs. 6,000. (C) Nagpur branch (In addition to [a] and [b]):

(i) Sent goods to Ahmadabad branch Rs. 9,000. 9 ,000. (ii) Received bills receivable from Ahmadabad branch Rs. 9,000. (iii) Received cash from Ahmadabad branch Rs. 5,000. 5 ,000. Q.30. Head office passes adjustment entry at the end of each month to adjust the positions arising out of inter branch transaction in Jan 20x…, make the entry in the books of o f head office: (a)Mumbai Branch (1) Received goods : Rs. 6,000 from Kolkata branch, Rs. 4,000 from Patna branch. (2) Sent goods : Rs. 10,000 to Patna, Rs. 8,000 to Kolkata. (3) Received B/R : Rs. 6,000 from Patna. (4) Sent acceptances: Rs. 4,000 to Kolkata, Kolkata, Rs. 2,000 to Patna. (b) Madras branch (apart from the above) (5) Received goods: goods: Rs. 10,000 from Kolkata, Rs. 4,000 from Mumbai. (6) Cash sent: Rs. 2,000 to Kolkata, Rs. 6,000 to Mumbai. (c) Kolkata Branch (apart from the above) (7) Sent goods to Patna: Rs. 6,000. (8) Paid B/P : Rs. 4,000 to Patna; Rs. 4,000 Cash to Patna. Q.31. A Limited Company has its head office in Delhi and a Branch in Mumbai where where a separate separate set of books is used. The following following are the trial balances extracted on 31 December 2008: Head office Trial Balance Share capital (Authorized: 10000 Equity shares of Rs. 100 each): Issued : 8000 Equity Shares Profit and Loss Account 1.1.08 Interim Dividend paid 1.1.08 General Reserve Current Assets Fixed assets Debtors and Creditors Profit for 2008 Cash balance

Rs.

Rs.

30,000 2,22,470 5,30,000 50,500 62,730

8,00,000 25,310 1,00,000 21,900 82,200 -

1,33,710 10,29,410 10,29,410

Branch current Account

Branch Trial Balance Fixed Assets Profit for 2008 Stock Debtors and Creditors Cash Balance Head Office Current Account

Rs. 95,000 50,460 19,100 6,550 1,71,110

Rs. 31,700 10,400 1,29,010 1,71,110

The difference between the balance of the current account in the two sets of books is accounted for as follows: (a)Cash remitted by the Branch on 31 December 2008, but received by the head office on 1 Jan 2009 Rs. 3,000. (b) stock stolen in transit from head office and charged to the Branch by the head office, but not credited to head office in the Branch books as the branch manager declined to admit the liability (not covered by insurance) Rs. 1,700. Give the branch current account in the head office books after incorporating incorporating branch branch Trial Balance through journal. Also prepare prepare the the Company’s Balance sheet as on 31 December 2008. Q.32. Mumbai Mumbai H.O. has has a branch at Chennai. Chennai. The Ledger balances of the branch for the year ended 31 March 2008 were follows:

Interest received Purchases Sales Goods from H.O. Creditors Sundry expenses Bank (Dr.) H.O. current Account Machinery Stock (opening) Debtors

Rs. 25,000 90,000 3,00,000 1,40,000 12,000 4,000 33,000 2,20,000 1,00,000 1,50,000 40,000

The closing stock amounted to Rs. 70,000. You get the following information from the H.O. (i)The head office sent goods to branch Rs. 10,000 on 30.3.08 which the branch received on 3.4.08. (ii) Branch furniture account stood in the H.O. books at Rs. 8,000. (iii) Branch Current Account in H.O. books had a debit balance of Rs. 2,30,000. Prepare a Trading and Profit and Loss Account in branch books after depreciating furniture by 5% and machinery by 10%. Also give Branch current account in H.O. books after posting incorporation entries to that account. Q.33. The following is the trial balance of Meerut branch as on 31 December 2008:

Delhi Head Office Stock 1.1.08 Purchases Goods received from H.O. Sales Good supplied to H.O. Salaries Debtors Creditors Rent Office expenses Cash at bank Furniture Depreciation on furniture

Debit  Credit  Rs. Rs. 3,240 6,000 97,800 19,000 1,38,000 6,000 4,500 3,700 1,850 1,960 1,470 1,780 6,000 400 1,45,850 1,45,850

Stock at Branch on 31 December, 2008 was valued at Rs. 7,700. Meerut Branch in the H.O. books on 31 December 2008 stood at Rs. 460(Debit). On 28 December 2008, the head office forwarded goods to the value of Rs. 3,700 to the branch where they were received on 3 Jan 2009. (i)Prepare Trading and Profit and Loss Account of Meerut Branch for the year ended 31 December 2008 and its Balance sheet on that date.

(ii) Pass journal entries in the books of H.O. to incorporate the above mentioned trail balance. (iii) Show Meerut Branch Account as it would be closed in H.O. Ledger. Q.34. Paulmae of Kolkata has a branch in Mumbai which keeps its own books. Summarized trail balances as at 31 December 2007 are given below: Kolkata Capital Fixed Assets Current Assets and Liabilities Profit and Loss Account Balance on 1 January 2007 Profit during the year Mumbai branch account 1 January 2007 Remittances from branch Goods sent to branch at cost

Debit(Rs.) Credit(Rs.) 10,00,000 14,00,000 8,80,000 4,90,000 6,70,000 5,40,000 6,64,000 3,00,000 56,000 30,00,000 30,00,000

Mumbai Fixed Assets Current Assets and Liabilities Head Office Account 1 January 2007 Remittances from branch Goods from head Office Profit and Loss Account 2007

3,65,000 3,18,000 3,20,000 10,03,000

1,73,000 6,64,000 51,500 1,14,500 10,03,000

The branch remitted Rs. 20,000 cash to H.O. on 30 December 2007 and head office sent goods to the branch of Rs. 4,500(at cost) on the same date. Both are in transit. Write up the branch account in Head Office ledger, the Head Office in branch ledger. You are also required required to prepare prepare a summarized a balance sheet for the entire business. Q.35. You are required to prepare the Trading and Profit and Loss Account and consolidated Balance sheet of Eve. Ltd., in Kolkata and its branch at Delhi. Give journal entries for incorporation of  of  Delhi Branch accounts in the Head Office. The Trial balance as on 31 December, 2008, is as under:

Manufacturing expenses Salaries Wages Cash in hand Purchases Capital Goods Received from H.O. Rent General expenses Sales Goods sent to branch Purchase returns Opening stock Discount earned Machinery-H.O. Machinery-Branch Furniture-H.O. Furniture-Branch Debtors Creditors H.O. account Branch account

H.O. Dr. Rs. 30,000 30,000 1,00,000 10,000 1,50,000 8,000 20,000 50,000 1,50,000 50,000 7,000 3,000 40,000 54,000 7,02,000

Branch Dr. Rs. 10,000 10,000 40,000 2,000 80,000 15,000 4,000 5,000 30,000 15,000 2,11,000

H.O. Cr. Rs.

Branch Cr. Rs. -

2,00,000 4,50,000 1,50,000 15,000 5,000 1,000 2,000 1,000 30,000 5,000 54,000 7,02,000 2,11,000

Closing stock at Head Office was Rs. 40,000 and at Branch Rs. 30,000. Depreciation is to be provided on Machinery @ 20 per cent and Furniture @ 15 percent. Rent Outstanding Outstanding is Rs. 500 (for branch). branch). Q.36.Sachin established a retail business in Delhi several years ago and has since opened branch shops at Mumbai, Kolkata and Chennai. All the purchasing and administration is done at the Head office. Branches are also allowed to purchase purchase locally in special circumstances. circumstances. Branches sell both for cash and on credit terms, but all invoices for credit sales are invoiced from Delhi and payments from credit terms, but all invoices for credit sales are invoiced from Delhi and payments from credit customers received there. The branches branches are expected expected to achieve achieve a profit of 50% on

cost price. The following following relates relates to the Bombay Bombay Branch Branch for the first six months of 2006:

Opening stock of goods at branch (cost price) Opening debtors Goods received by branch at selling price Credit sales Cash sales Transfer from other branches to Mumbai branch at selling price Transfer to other branches from Mumbai at selling price Goods returned to H.O. at selling price Cash from debtors received at H.O. Bad debts written off  Goods returned by credit customers to branch Goods returned by credit customers to H.O. Goods purchased by Mumbai branch from local Suppliers(cost) Expenses at the branch Closing stock at branch From H.O. at selling price From local purchases

Rs. 28,000 9,000 1,80,000 60,000 1,02,000 12,000 21,000 6,000 53,000 2,000 2,400 1,200 15,000 7,500 45,000 3,000

Additional information: (i)Goods amounting amounting to Rs. 6,000 at cost to H.O. were in transit. (ii) Branch had on 1 January 2006 furniture and other equipment at a book value of Rs. 7,500. Depreciation at 10% p.a. is to be provided on this item. (iii) Goods purchased locally were sold at 25% profit on sale price. Prepare (i) Branch stock account, (ii) branch debtors account and (iii) Mumbai branch account. Q.37.Banu of Kanpur Kanpur has a branch in Ambala. Ambala. Goods sent to branch are invoiced at selling price i.e., cost plus 33-1/3%. From the following particulars, you are required to prepare the Branch Stock Account and Branch adjustment account as they would appear in the book of head office:

Stock on 01-04-2005 Stock on 31-03-2006 Goods sent to Ambala during the year at invoice price

Rs. 15,000 12,000 1,00,000

Sales at branch On credit For cash Returns to H.O. at invoice price Invoice value of goods lost by fire not covered by insurance

32,000 75,000 5,000 1,000

Q.38.Shri X has a retail branch at Allahabad. Goods are sent by the Head Office to the branch marked at selling price which is cost plus 25%. All the expenses of of the branch are paid by the Head Office. All cash collected collected by the branch branch (from customers customers and from cash sales) is deposited to the credit of H.O. From the following particulars of the Branch, prepare Branch Stock Account, Branch debtors, Branch expenses Account and Branch Adjustment Account in the books of the Head Office:

Debtors on 01.01.2006 Debtors on 31.12.2006 Inventory with the Branch at Invoice Price: On 01.01.2006 On 31.12.2006 Cash sales during the year Total amount deposited in the H.O. account during the year Returned goods to H.O. at Invoice Price Salaries paid Rent paid Discount allowed to customers Bad debts written off  Spoilage

Rs. 12,000 14,000 16,000 17,000 60,000 1,27,000 5,000 6,000 4,000 2,000 1,000 2,000

Q.39. Subhash Electricals has branch in Chandigarh and Gwalior to whom goods are invoiced at at cost plus 25%. Following information information is available of the transactions at Chandigarh Branch for the year ending 31 March 2005: Rs. Balances at 1 April 2006: Stock at invoice price Debtors Petty cash Transactions during 2005-06: Goods sent to Branch at invoice price

40,000 12,000 150 4,20,000

Goods returned to Head Office at invoice price Cash sales Credit sales Normal loss at invoice price Goods pilfered at invoice price Goods lost in fire at invoice price Insurance company paid to Head office for loss by fire at Chandigarh Cash sent for petty expenses Bad debts at Chandigarh branch Goods transferred to Gwalior Branch under instructions From head office at invoice price Insurance charges paid by Head Office Goods returned by debtors Balance on 31 March 2006: Petty cash Debtors Stock

15,000 1,05,000 1,80,000 350 3,000 4,000 3,000 32,000 400 12,000 200 500 250 11,000 ? 

Note: Goods transferred to Gwalior Branch (given above) were in transit on 31 March 2006. Prepare: (i) Branch Stock Account (ii) Branch

adjustment Account (iii) Branch profit and loss account(iv) stock reserve account. Q.40. Mahesh Kumar Khanna of Shalimar Bagh, Delhi invoices goods to its Noida Branch at 20% less than the list price which is cost plus 100 percent, with instructions that cash sales were to be made at invoice price and credit sales at list price. From the following particulars available from Noida Branch, prepare: (a)Branch stock account (b) Branch debtors account (c)Branch adjustment account (d) Noida branch account to verify the profit for the year ending on 31-32006.

Stock on 1 April 2005 at invoice price Debtors on 1-4-2005 Personal computer (P.C.) at Branch Goods received from head office at invoice price Cash sales Credit sales

Rs. 18,000 10,000 50,000 1,80,000 82,000 1,20,000

Goods-in-transit Goods-in-transit on 31 March 2006 Cash sent to Branch for expenses Actual expenses at branch Stock at the end at invoice price Bad-debt written off  Goods returned by customers direct to Head Office at list price Debtors at the end Depreciate personal computer by

10,000 32,000 30,000 16,000 400 1,500 8,100 20%

Q.41. Atlantic Paper Products sent goods to Bhopal branch at cost price plus 25%. You are given the following particulars:

Opening stock at Branch at its cost Goods sent to Branch at its invoice price Loss-in-transit Loss-in-transit at invoice price Theft at invoice price Loss in weight (normal) at invoice price Sales Expenses Closing stock at the cost to branch Claims received from the insurance company for loss-intransit

Rs. 5,000 20,000 2,500 1,000 500 25,500 8,000 6,000 2,000

Required: (i) Branch Stock Account (ii) Branch Adjustment account (iii) Branch Profit and loss Account. Q.42. Novelties Limited with its head office in Kolkata invoice good to its branch at Mumbai at 20% less than the catalogue price which is cost cost plus 50% with with instructions that cash sales sales were to be made at invoice price and credit sales at catalogue price less discount at 15% on prompt payments. From the particulars available from the branch, prepare the Branch Stock Account, Branch adjustment Account and Branch Profit and Loss Account for the year ended 31 March 2006 (showing workings) in the head office books:

Stock on 1 April 2005 (invoice price) Debtors on 1 April 2005 Goods received from H.O. (invoice price)

Rs. 12,000 10,000 1,32,000

46,000 1,00,000 85,635  13,365  6,000 1,20,000 11,000 5,635  15,000

Sales (cash) Sales (credit) Cash received from debtors Discount allowed to debtors Expenses at the branch Remittances to H.O. Debtors on 31 March 2006 Cash in hand on 31 March 2006 Stock on 31 March 2006 (invoice price)

It was further reported that a part of the stock was lost by fire (not covered by insurance) during the year whose value is to be ascertained and a provision should be made for discount to be allowed to debtors as on 31 March 2006 on the basis of year’s trend of prompt payments.

Q.43. ABC & Co. of Bombay opened a Branch in Delhi during 2006 and dispatched goods at cost plus the expected mark up of 331/3%. All accounts are are maintained at H.O. On On December December 31, 2006 the Branch Account has a debit balance of Rs. 2,120 representing Branch Stock of Rs. 1,200 (at cost)and Rs. 920 for Branch Debtors. On 1-1-2007 some of these these goods costing Rs. 150 were reduced in selling price to Rs. 160. during 2007, the Bombay office sent goods costing Rs. 18,600 to Delhi which still has unsold stock of Rs. 2,400 (invoice price) Record the above under the stock and Debtors system incorporating the following information regarding sales: 1. Cash sales at branch (including all goods marked down at the beginning of the year and some other goods costing Rs. 1,800 and sold for half of  normal selling prices). 2. Cash received from debtors 3. Goods returned by debtors to Bombay office 4. Branch debtors written off  5. Debtors on December 31, 2007

Rs. Rs. Rs. Rs. Rs.

16,060 6,280 80 30 830

Q.44. X Ltd., Mumbai, started on 1 April 2006, has two branches at Kanpur and Lucknow. All goods sold sold at the branches are received from the Head Office invoiced at cost plus 25%. All expenses relating to Branches are paid by the H.O. Each branch has its own sales ledger ledger and and sends weekly statements. All cash collections

are remitted remitted daily to Head Office by the branches. branches. The following following particulars relating to the year ended 31 March 2007 have been extracted from the weekly statements sent by the Branch: Br anch: Kanpur  Lucknow  Rs. Rs. 1,25,200 1,10,000 78,600 85,200 2,300 1,200 34,500 23,600 3,200 4,500 6,000 ---16,000 18,000 2,600 1,500 150,000 1,25,000 7,500 5,200 45,000 35,000

Credit sales Cash sales Sales returns Sundry debtors Rent and rates Bad debts Salaries General expenses Goods received from H.O. Advertisement Stock on 31 March 2007

You are required to prepare the Branch Accounts as they would appear in the books of the head office, showing the Profit or Loss for the period and Trading and Profit and Loss account separately for each branch. Q.45. Journalize the following transactions in the books of Head Office as well as Branch Office: (i)Goods worth Rs. 5,000 are supplied by Delhi Branch to Agra Branch under the instructions from Head Office. (ii)Delhi Branch draws a bills receivable for Rs. 5,000 on Agra Branch which send its acceptance. (iii)Head Office charges Rs. 4,000 from Delhi Branch as Head Office administrative expenses. expenses.

Q.46. Vanshika trader with their H.O. is Mumbai whose Branch office is in Delhi which obtains goods partly from H.O. and partly from outsiders. outsiders. The branch keeps a separate set of books the the following balances were extractedon.

Capital

Mumbai Dr. Cr. Rs. Rs. 4,00,000

Delhi Dr. Rs. -

Cr. Rs. -

Plant and Machinery Furniture and Fixture Loose tools P & L Account (1-1-05) Debtors and Creditors Cash in hand Cash at bank Purchases and sales Salaries and Wages Rent General Expenses Goods from H.O. to Branch Current Account Opening Stock (1-1-05)

2,80,000 50,000 25,000 40,000 18,000 35,000 2,30,000 55,000 10,000 25,000 5,000 2,800 15,000 6,000 6,00,000 8,10,000 1,12,000 2,45,000 30,000 16,000 15,000 8,500 5,000 7,500 90,000 80,000 70,000 55,800 50,000 40,000 13,90,000 13,90,000 3,25,800 3,25,800

The difference between the balances of H.O. Current Account and branch Current Account is due to goods and cheques-in-transit as at the date of  preparation of Trial Balance. Rent of Branch office office remains remains unpaid Rs. 150. Plant, furniture and loose Tools are to be depreciated at 10% p.a. and 20% p.a. respectively: Stocks in trade valued on 31-12-05 were as follows: Head Office- Rs. 65,000; Branch – 35,000. Prepare a combined Trading and Profit and Loss Account for the year 3112-05 and a balance sheet as at that date.