inland branch complete)
DESCRIPTION
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Tuhi Nirankar
INLAND BRANCHFrom the accounting point of view, the branches may be classified as follows: Branches
Inland Branches Foreign Branches
Dependent Branches Independent Branches
Dependent Branches : A dependent branch is on whose policies and administration ae totally controlled by the head office and head office maintains the accounts of the branch.
In case of retail selling branches, the head office may maintain the accounts of such branches by any of the following methods:
(1) Debtors System. (2) Stock and Debtors system. (3) Final Account System. (4) Wholesale Branch System.
Note : As the requirement of the Syllabus, we shall discuss Dependent branches and Ascertainment of Profit by Debtor Method and Stock and Debtor Method.
Debtor System : Under this method the head office prepares a separate account for each branch on the basis of its location such as Mumbai Branch, kolkata Branch and so on or a code number may be used for each branch. The Branch Account, under this system, is a nominal account . Goods may be sent to the branch at cost or at selling price. Selling price is also known as invoice price. The accounting procedures in cost price method and invoice price method is slightly different.
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TUHI NIRANKAR
GYAN'S CLASSESAddress : A-7/2, Street Of State Bank of India, Pardhan Market, Sant Nirankari Colony, Delhi-110009.
Contact No. 9811272741, 9968892456, E-mail : [email protected] : http://gyansclasses.jimdo.com, Also Visit : www.gurdeepsingh.jimdo.com
Tuhi Nirankar
Format of Branch Account at cost price is shown below :
In the books of Head Office.....................Branch Account
Dr. Cr. Particulars Rs. Particulars Rs.
To Balance b/d Furniture Stock Debtors Prepaid Expenses Petty Cash
To Goods Sent to Branch A/c Goods sent by H.O. Goods sent by other branchesTo Bank Salaries Rent and Rates Petty CashTo Balance c/d Creditors Outstanding ExpensesTo Net Profit transferred to General Profit and Loss A/c
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By Balance b/d Creditors Outstanding ExpensesBy Bank A/c Cash Sales Cash Received from Debtors Cash sent by Debtors Direct to the H.O.By Goods sent to Branch Returned by Branch to the H.O. Returned by Branch to other Branches Returned by Debtors directly to H.O.By Balance c/d Furniture Less : Depreciation Stock Debtors Prepaid Expenses Petty Cash*By Net Loss transferred to General Profit or Loss A/c
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* Either of the two will appear.
Invoice Price method : When the goods are sent by the head office to the branch at selling price or invoice price i.e. Cost plus some percentage of profit, the branch manager is required to sell the goods at invoice price only. The method of preparation of Branch Account is same as in case of cost price method except that the journal entries relating to opening stock, goods sent to branch, goods return to head office and closing stock are mde at invoice price and to remove the loading (difference between the invoice and cost price) the following adjustment entries are made:
1. For removing loading from the amount of opening stock : Stock Reserve A/c Dr.
To Branch A/c
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Tuhi Nirankar
2. For removing loading from the amount of goods sent to branch : Goods Sent to Branch A/c Dr.
To Branch A/c
3. For removing loading from the amount of goods returned to the head office. Branch A/c Dr.
To Goods Sent to Branch A/c
4. For removing loading from the closing stock : Branch A/c Dr.
To Stock Reserve A/c
Format of Branch Account at invoice price is shown below : In the books of Head Office................... Branch Account
Dr. Cr. Particulars Rs. Particulars Rs.
To Balance b/d Stock (at invoice price) Debtors Petty Cash FurnitureTo Goods Sent to Branch A/cTo Bank A/c Salaries Rent Petty CashTo Goods Sent to Branch A/c (loading on goods returned to H.O.)To Stock Reserve (loading on closing stock)To Balance c/d Creditors Outstanding Expenses*To Net Profit transferred to General Profit and Loss A/c
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By Balance b/d creditors Outstanding ExpensesBy Stock Reserve (loading on opening stock)By Goods Sent to Branch A/c (Return to H.O.)By Bank A/c Cash Sales Received from DebtorsBy Goods sent to Branch A/c (loading on goods sent to Branch)By Balance c/d Stock Debtors Petty Cash Furniture*By Net Loss transferred to General Profit and Loss Account
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Tuhi Nirankar
Stock and Debtors System : Under this system the head office usually maintains the following accounts in order to exercise greater control over the branch stock and branch expenses : (i) branch Stock Account (ii) Branch Debtors Account; (iii) Branch Expenses Account; (iv) Goods Sent to Branch Account; (v) Branch Adjustment Account; (vi) Branch Profit and Loss Account (vii) Branch Fixed Assets Account; (viii) Branch Cash Account. This system is usually adopted when the goods are invoiced at selling price.
Format of Branch Stock Account, Branch Debtors Account, Branch Expesnses Account, Branch Adjustment Account and Branch profit And Loss Account are given below:
In the books of the Head OfficeBranch Stock Account
Dr. Cr. Particulars Rs. Partculars Rs.
To Balance b/d at Branch xxx in transit xxxTo Goods Sent to Branch A/cTo Branch Adjustment A/c (Surplus due to slae of goods at higher price than invoice price)
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XXX
By Branch Cash (Cash Sales)By Branch Debtors (Credit Sales)By Goods Sent to Branch A/c (Return of goods to H.O. Or to other branches)By Branch Profit and Loss A/c (Cost of Shortage due to abnormal loss)By Branch Adjustment A/c (Both loading and cost of normal loss)By Balance c/d at Branch xxx in transit xxx
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XXX
Branch Debtors AccountDr. Cr.
PARTICULARS AMOUNT PARTICULARS AMOUNTTo Balance b/dTo Branch Stock A/c (Credit Sales)To Bills Receivable A/c (B/R dishonoured)
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By Branch Cash A/c (Cash padi to Branch)By Cash A/c (Cash paid directly to H.O.)By Bills Receivable A/c)By Branch Stock A/c (Return of goods to Branch)By Goods Sent to Branch A/c (Return of goods by debtors direct to H.O.)By Branch Expenses (Bad Debts)By Branch Expenses (Discount)By Balance c/d
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Tuhi Nirankar
Branch Expenses AccountDr. Cr.
Particulars Rs. Particulars Rs.To Branch Cash A/c (Expenses paid by branch)To Cash/Bank A/c (Expenses paid by H.O.)To Branch Debtors A/c Bad Debts DiscountTo Branch Fixed Assets A/c (Depreciation)
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xxx
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By Branch profit and loss A/c (Balancing figure)
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xxx
Branch Adjustment AccountDr. Cr.
Particulars Rs. Particulars Rs.To Goods Sent to branch A/c (Loading on goods returned by branch to H.O. Or to other branch)To Goods Sent To Branch A/c (Loading on goods returned by debtors direct to H.O.)To Branch Stock A/c (Loading on shortage due to abnormal Loss)To Branch Stock A/c (Invoice price of normal loss of goods)To Stock Reserve A/c (Loading on closing stock)To Gross Profit t/f to Branch Profit and Loss A/c
xxx
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By Stock Reserve A/c (Loading on opening stock)By Goods sent to Branch A/c (Loading on goods sent to Branch by H.O. Or by any other branch)By Branch Stock A/c (Surplus due to sale of goods at higher price than invoice price)
xxx
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Tuhi Nirankar
Branch Profit and Loss AccountDr. Cr.
Particulars Rs. Particulars Rs.To Branch Stock A/c (Cost of shortage due to abnormal loss)To Branch Expenses *To Net Profit transferred to General Profit and Loss Account
xxx
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By Gross Profit t/f from branch Adjustment A/cBy Branch Cash/Cash A/c (Insurance claim received)*By Net Loss transferred to General Profit and Loss Account
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Debtors System : Cost Price MethodQ. 1 ( When Goods are supplied at cost) M/s Nirankari Brothers are having their Head Office at Delhi and Branch at Meerut. The following are thr transactions of the Head Offic with the Branch for the year ended 31 st March 2006. Rs. Rs. Opening balance (1, 4, 2005) Stock 5,000 Debtors 3,500 Petty Cash 150 8,650Goods sent to branch during the year 40,000 Goods returned by the branch 2,500 Cash Sales 15,000 Cash received on ledger accounts 35,000 Goods returned by the debtors 3,000 Discount allowed 1,000 Bad Debts 1,500
Branch expenses met by the H.O. Salaries and wages 5,000 Rent and Rates 3,000 Telephone 1,000
Others 1,500 10,500Cash sent to Branch for petty Cash 1,200 Closing Balances at branch (31-3-2006) Stock 9,000 Debtors 6,000
Petty Cash 100 15,100
Prepare Meerut Branch Account and Goods sent to branch Account in the books of H.O.
Q. 2 [When cash received from debtors is not given] : Gurdeep Trading Co., Delhi, opened a branch at Hyderabad on 1st April 2005. The following information is available in respect of the branch for the year 2005-2006 :
Particulars Rs.Goods sent to the branchCash Sales at the branch
75,00050,000
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Tuhi Nirankar
Particulars Rs.Credito sales at the branchSalaries of the branch staf paid by the Head OfficeOffice expenses of the branch paid by the Head OfficeCash remittance to branch towards petty cashPetty Cash at branch on 31-3-2006Debtors of branch as on 31-3-2006Stock at the branch on 31-3-2006
60,00015,00012,0006,000
5005,000
27,000 Prepare Branch Account to show the Profit/Loss from the branch for the year.
Q. 3 M/s Gurdeep Ltd. Invoices goods to their various branches at various branches at cost plus 25% branches sell the goods for both cash and credit branch expenses are paid by the Head Office. From the following particulars relating to their Jamshedpur branch, prepare the necessary ledger accounts in the books of Head Office to calculate profit of the branch as per the Debtors system : Rs. Branch Stock on 01-01-1990 at I.P. 8,000 Branch Debtors on 1-1-1990 4,000 Branch Petty Cash on 01-01-1990 500 Branch Furniture on 01-01-1990 6,000 Goods invoiced to branch during 1990 22,000 Goods returned by branch 800 Cheques sent to branch during 1990 : For Salaries 2,000 For Rent 1,000 For Petty Cash 300 Cash Sales by branch 10,000 Cash collected from Debtors by branch 9,000 Credit Sales by branch 25,000 Goods returned by branch debtors to branch 400 Discount allowed to debtors 500 Bad Debts 100 Branch Stock at I.P. On 31-12-1990 10,000 Branch Petty Cash on 31-12-1990 200 Furniture is to be depreciated @ 10%
[B.Com (Pass) 1992]Q. 4 Sehajta ltd. Delhi a branch in Amritsar on 1 st April 2001 to which goods were sent 20% above cost. Branch expenses are met from branch cash, balance money remitted to Head Office. The following further details are given for the year ended 31 st March, 2002.
Rs.Cost of goods sent to BranchGoods received by branch till 31 st March, 2002 at invoice price Credit sales for the yearDebtors as on 31 st March, 2002 bad debtsCash remitted to Head OfficeCash in hand at Branch of 31 st March, 2002 Cash remitted by Head Office 'O branch during the yearClosing Stock at Branch at invoice priceExpenses incurred at Branch
50,00054,00058,00020,000
20043,0002,0003,0006,000
12,000
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Tuhi Nirankar
Show the Branch Account in the Head Office books t determine Profit/Loss for the Branch for the year ended 31 st March, 2002. Give your working clearly.
[B Com (Pass) 2003 (External)]Q. 5 Hardev Company has a branch at Delhi. Goods are invoice from Head Office at cost plus 33 1/3%. Find out profit at the Branch according to Debtors System.Opening Balances : Rs. Debtors 10,000 Petty Cash 1,000 Furniture 2,000 Stock (I.P.) 8,000 Cash sent by Head Office for Petty Expenses 2,000 Branch Expenses and Losses : Freight and Advertisement 5,600 Bad Debts 50 Depreciation on Furniture 80 Petty Expenses 1,500 Sales : Cash 50,000 Credit 36,000 Goods returned by Debtors 800 Goods returned by branch to Head Office 2,000 Cash received from Debtors 20,000 Stock at the end at I.P. 7,800 Goods invoiced by Head Office during the year 88,000
[B.Com. (P) Delhi 1991]
Q. 6 Gyan Shoe Stores has an old established branch at Chandigarh. Goods are invoice to the branch at 20% profit on sales, the branch having been instructed to send all cash daily to the head office. All expenses are paid by the head office except petty expenses which are met by the branch manager. From the following particulars, your are required to draw up branch account as it would appear in the books of the Head Office, i.e. Gyan Shoe Stores : Rs. Stock on January 1, 2006 (Invoice Price) 15,000 Sundry Debtors on January 1, 2006 9,000 Cash in Hand on January 1, 2006 400 Office Furniture on January 1, 2006 1,200 Goods supplied by the Head Office (Invoice Price) 80,000 Goods returned to head Office 1,000 Goods received from Debtors 480 Cash Received from Debtors 30,000 Cash Sales 50,000 Credit Sales 30,000 Discount Allowed 300 Expenses Paid by the Head Office : Rent 1,200 Salary 2,400 Stationery and Printing 300 3,900Petty Expenses paid by the Branch Manager 280 Provide depreciation on furniture @ 10% p.a.Rent outstanding 500
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Tuhi Nirankar
Stock on 31-12-2006 (Invoice Price) 14,000 [B. Com. (P) 1993 modified]
Q. 7 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: Rs. Stock with Branch on 1-1-2006 (at invoice price) 66,000 Branch Debtors on 1-1-2006 22,000 Petty Cash balance on 1-1-2006 500 Goods received from Head Office (at invoice price) 2,04,000 Goods returned to head Office 6,700 Credit Sales 87,000 Sales Returns 3,000 Allowance to Customer on Selling Price (already adjusted while invoicing) 2,000 Cash received from debtors 93,000 Discount allowed to debtors 2,400 Expenses (cash paid by Head Office) : Rs. Rent 2,400 Salaries 24,000 Petty Cash 2,000 28,400Cash Sales 1,06,000 Stock with Branch on 31-12-2006 (at Invoice Price) 69,000 Petty Cash Balance on 31-12-2006 100
[B. Com. (Pass) 2001]Q. 8 Delhi head Office supplied goods to its branch at Kanpur at invoice price which is cost plus 50%. All cash received by the branch is remittted to Delhi and all branch expenses are paid by the Head Office. From the following particulars rlating 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 find out the gross 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 out the gross profit and net profit made by the branch :
Rs.Stock with Branch on 1-1-1996 (at Invoice price) 60,000 Branch Debtors on 1-1-1996 12,000 Petty Cash balance on 1-1-1996 100 Goods received from Head Office (at Invoice price) 1,86,000 Goods returned to head Office 18,000 credit sales less Returns 86,000 Cash received from Debtors 90,000 Discount allowed to Debtors 2,400 Expenses (cash paid to Head Office)Rent 2,400 Salaries 24,000Petty Cash 1,000 27,400Cash Sales 1,04,000
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Tuhi Nirankar
Stock with branch on 31-12-1996 (at Invoice price) 54,000 Petty cash balance on 31-12-1996 100
[B. Com (Pass) 1997]Q. 9 Gurdeep & Co. Of Hyderabad have a branch at Warangal all purchases are made by the head office and goods sent to branch at are invoice at selling price which is 20% above cost. All sales by the branch are on credit terms. Branch expenses are paid by the H.O. And all cash received by the branch is remitted to H.O. All branch transactions ar recorded in the H.O. Books. The balances relating to the branch in the H.O. Books on balances relating to the branch in the H.O. Books on 1-1-2006 were as follows :
Rs.Branch Stock Account (Invoice price) 36,000 Branch Debtors Account 25,750 Transactions during the year to 31-12-2006 were :Goods sent to branch at Invoice price 3,24,600 Returns from Branch to H.O. At invoice price 6,420 Cash received from Debtors 3,10,000 Discount allowed to Debtors 5,750 Branch expenses paid by H.O. 30,000 branch Stock Account (Invoice Price) 31-12-2006 48,180Branch Debtors 31-12-2006 10,000
Prepare in the H.O. Books (a) Branch Stock Account, (b) Branch Debtors Account, (c) Branch Expenses Account and (d) Branch Adjustment Account.
[B. Com (Pass) 1993]Q. 10 Mumbai Traders Ltd. Sends goods to its Delhi branch at cost plus 25 per cent. From the following particulars you are required to prepare the Branch Stock account. Branch Stock adjustment A/c in the head office books; showing Gross Profit and net Profit.
Rs.Opening Stock at branch at invoice price 20,000 Goods sent to branch at invoice price 1,00,000 Loss in transit at invoice price 10,000 pilferage at invoice price 4,000 Sales 1,22,000 Expenses 23,000 Closing Stock at branch at invoice price 24,000 Recovered from insurance company against loss in transit 6,000
[B.Com (Pass) 2006 External]
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Tuhi Nirankar
1. For goods sent to the Branch by H.O . Branch Stock A/c Dr. (At invoice)
To Goods Sent to Branch A/c
2. For goods returned by the Branch to the H.O . Goods Sent to the branch A/c Dr.
To Branch Stock A/c
3. For goods sold for cash. Branch Cash A/c Dr.
To Branch Stock A/c
4. For goods sold on credit. Branch Debtors A/c Dr. To Branch Stock A/c
5. For cash received from debtors by the Branch Branch Cash A/c Dr. To Branch Debtors A/c
6. For bad debts, discount allowed to debtors etc. Branch Expenses A/c Dr. To Branch Debtors A/c
Note : Alternative, Branch Profit and Loss A/c may be debited and Branch Debtors A/c credited when bad debts are written off or when discount is allowed to debtors.
7. For Branch expenses paid in cash by the Branch. Branch Expenses A/c Dr. To Branch Cash A/c
8. For Branch expenses paid in cash by the Head Office. Branch Expenses A/c Dr. To Cash/bank A/c
9. For depreciation on Branch fixed assets. Branch Expenses A/c Dr. To Branch Fixed Assets A/c
Note : Alternative, branch profit and loss A/c may be debited and Branch Fixed Assets A/c credited for charging depreciation on branch fixed assets.
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STOCK DEBTOR METHOD(JOURNAL ENTRIES)
Tuhi Nirankar
10. For return of goods by debtors to the branch. Branch Stock A/c Dr. To Branch Debtors A/c 11. For return of goods by debtors direct to Head Office. Goods sent to Branch A/c Dr. To Branch Debtors A/c Note : Alternative, the following two entries may be made when goods are returned by debtors direct to the Head Office.
(a) Branch Stock A/c Dr. To Branch Debtors A/c
(b) Goods sent to Branch A/c Dr. To Branch Stock A/c
12. For abnormal loss of stock. Branch Adjustment A/c (with loading portion) Dr. Branch Profit and Loss A/c (with cost price) Dr. To Branch Stock A/c (with invoice price)
Note: Alternatively, the following twp entries may be passed for abnormal loss of stock.
(a) Shortage in Stock/Loss by Fire A/c Dr. To Branch Stock A/c
(b) Branch Adjustment A/c (with loading portion) Dr. Branch Profit and Loss A/c (with cost portion) Dr. To Shortage in Stock/Loss by Fire A/c
When the goods are insured and a claim is admitted by the insurance company, then to the extent the claim admitted, Insurance Company's Account is debited and Branch Profit and Loss Account is credited or debit in the Branch Profit and Loss Account is reduced accordingly.
13. For Normal loss of goods. Branch Adjustment A/c (with invoice price) Dr. To Branch Stock A/c 14. For Surplus in stock. Branch Stock A/c (with invoice price) Dr. To Branch Adjustment A/c (with loading portion) To Branch Profit and Loss A/c (with cost portion) Note : This is not assumed unless directed in the question. Therefore, this entry is usually not passed.
15. For Surplus in the Branch Stock Account due to sale at a higher price than invoice price. (It is know as surplus on trading) Branch Stock A/c Dr. To Branch Adjustment A/c 16. For recording the difference between invoice price selling price when the goods are sold at less than the invoice price. Branch Adjustment A/c Dr. To Branch Stock A/c
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Tuhi Nirankar
17. For loading on opening stock. Stock Reserve A/c Dr. To Branch Adjustment A/c
18. For loading on the net goods sent (loading on Goods sent to Branch by H.O. And by other branches less goods returned by branch to the H.O. And to other branches and goods returned by debtors to the H.O.) Goods sent to Branch A/c Dr. To Branch Adjustment A/c Note : Alternatively, separate entires may be passed for loading on goods sent to branch and goods returned by branch as follow:(a) For loading on goods sent to branch by H.O. of by other branches. Goods sent to branch A/c Dr. To Branch Adjustment A/c
(b) For loading on goods returned by branch to the H.O. Or to other branches and for loading on goods directly returned by debtors to the H.O. Branch Adjustment A/c Dr. To Goods sent to Branch A/c
19. For loading on closing stock. Branch adjustment A/c Dr. To Stock Reserve A/c
20. For transferring gross profit. Branch Adjustment A/c Dr. To Branch Profit and Loss A/c 21. For transferring Branch expenses. Branch Profit and Loss A/c Dr. To Branch Expenses A/c
22. For Transfer of net profit/net loss to general profit & loss account.
(a) If Net profit Branch Profit & Loss A/c Dr. To General Profit and Loss A/c (b) If Net loss General Profit & Loss A/c Dr. To Branch Profit & Loss A/c 23. For closing the goods sent to branch account. Goods sent to Branch A/c Dr. To Purchases A/c (in case of a trader) To Trading A/c (in case of a manufacturer)
Stock and Debtors SystemQ. 11. Nanak Corporation Ltd. Has two branches—one at Jaipur and another at Lucknwo. Goods ae invoiced 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:
Rs. Stock on January 1, 2006 9,300
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Tuhi Nirankar
Debtors on January 1, 2006 6,800 Goods sent to Branch (at cost) 34,000 Sales at Branch Cash 25,010 Credit 31,000 Cash collected from Debtors 30,400 Goods returned by branch to H.O. 1,200 Goods transferred from Lucknow Branch to Jaipur Branch 1,500 Shortage of Stock 2,100 Shortage of Stock at Branch 450 Discount allowed to customers 200 Exenses at Branch 5,400
[B. Com (Pass) 2000 External]
INLAND BRANCH (JOURNAL ENTRIES OF STOCK DEBTOR METHOD) 1. For goods sent to the Branch by H.O .
Branch Stock A/c Dr. (At invoice) To Goods Sent to Branch A/c
2. For goods returned by the Branch to the H.O . Goods Sent to the branch A/c Dr.
To Branch Stock A/c
3. For goods sold for cash. Branch Cash A/c Dr.
To Branch Stock A/c
4. For goods sold on credit. Branch Debtors A/c Dr. To Branch Stock A/c
5. For cash received from debtors by the Branch Branch Cash A/c Dr. To Branch Debtors A/c
6. For bad debts, discount allowed to debtors etc. Branch Expenses A/c Dr. To Branch Debtors A/c
Note : Alternative, Branch Profit and Loss A/c may be debited and Branch Debtors A/c credited when bad debts are written off or when discount is allowed to debtors.
7. For Branch expenses paid in cash by the Branch. Branch Expenses A/c Dr. To Branch Cash A/c
8. For Branch expenses paid in cash by the Head Office. Branch Expenses A/c Dr. To Cash/bank A/c
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Tuhi Nirankar
9. For depreciation on Branch fixed assets. Branch Expenses A/c Dr. To Branch Fixed Assets A/c
Note : Alternative, branch profit and loss A/c may be debited and Branch Fixed Assets A/c credited for charging depreciation on branch fixed assets.10. For return of goods by debtors to the branch. Branch Stock A/c Dr. To Branch Debtors A/c
11. For return of goods by debtors direct to Head Office. Goods sent to Branch A/c Dr. To Branch Debtors A/c Note : Alternative, the following two entries may be made when goods are returned by debtors direct to the Head Office.
(a) Branch Stock A/c Dr. To Branch Debtors A/c
(b) Goods sent to Branch A/c Dr. To Branch Stock A/c
12. For abnormal loss of stock. Branch Adjustment A/c (with loading portion) Dr. Branch Profit and Loss A/c (with cost price) Dr. To Branch Stock A/c (with invoice price)
Note: Alternatively, the following twp entries may be passed for abnormal loss of stock.
(a) Shortage in Stock/Loss by Fire A/c Dr. To Branch Stock A/c
(b) Branch Adjustment A/c (with loading portion) Dr. Branch Profit and Loss A/c (with cost portion) Dr. To Shortage in Stock/Loss by Fire A/c
When the goods are insured and a claim is admitted by the insurance company, then to the extent the claim admitted, Insurance Company's Account is debited and Branch Profit and Loss Account is credited or debit in the Branch Profit and Loss Account is reduced accordingly.
13. For Normal loss of goods. Branch Adjustment A/c (with invoice price) Dr. To Branch Stock A/c 14. For Surplus in stock. Branch Stock A/c (with invoice price) Dr. To Branch Adjustment A/c (with loading portion) To Branch Profit and Loss A/c (with cost portion) Note : This is not assumed unless directed in the question. Therefore, this entry is usually not passed.
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Tuhi Nirankar
15. For Surplus in the Branch Stock Account due to sale at a higher price than invoice price. (It is know as surplus on trading) Branch Stock A/c Dr. To Branch Adjustment A/c 16. For recording the difference between invoice price selling price when the goods are sold at less than the invoice price. Branch Adjustment A/c Dr. To Branch Stock A/c
17. For loading on opening stock. Stock Reserve A/c Dr. To Branch Adjustment A/c
18. For loading on the net goods sent (loading on Goods sent to Branch by H.O. And by other branches less goods returned by branch to the H.O. And to other branches and goods returned by debtors to the H.O.) Goods sent to Branch A/c Dr. To Branch Adjustment A/c Note : Alternatively, separate entires may be passed for loading on goods sent to branch and goods returned by branch as follow:(a) For loading on goods sent to branch by H.O. of by other branches. Goods sent to branch A/c Dr. To Branch Adjustment A/c
(b) For loading on goods returned by branch to the H.O. Or to other branches and for loading on goods directly returned by debtors to the H.O. Branch Adjustment A/c Dr. To Goods sent to Branch A/c
19. For loading on closing stock. Branch adjustment A/c Dr. To Stock Reserve A/c
20. For transferring gross profit. Branch Adjustment A/c Dr. To Branch Profit and Loss A/c 21. For transferring Branch expenses. Branch Profit and Loss A/c Dr. To Branch Expenses A/c
22. For Transfer of net profit/net loss to general profit & loss account.
(a) If Net profit Branch Profit & Loss A/c Dr. To General Profit and Loss A/c
(b) If Net loss General Profit & Loss A/c Dr. To Branch Profit & Loss A/c
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Tuhi Nirankar
23. For closing the goods sent to branch account. Goods sent to Branch A/c Dr. To Purchases A/c (in case of a trader) To Trading A/c (in case of a manufacturer)
QUESTIONSQ. 12 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: Rs. Stock with Branch on 1-1-2006 (at invoice price) 66,000 Branch Debtors on 1-1-2006 22,000 Petty Cash balance on 1-1-2006 500 Goods received from Head Office (at invoice price) 2,04,000 Goods returned to head Office 6,700 Credit Sales 87,000 Sales Returns 3,000 Allowance to Customer on Selling Price (already adjusted while invoicing) 2,000 Cash received from debtors 93,000 Discount allowed to debtors 2,400 Expenses (cash paid by Head Office) : Rs. Rent 2,400 Salaries 24,000 Petty Cash 2,000 28,400Cash Sales 1,06,000 Stock with Branch on 31-12-2006 (at Invoice Price) 69,000 Petty Cash Balance on 31-12-2006 100
[B. Com. (Pass) 2001]
Q. 13 Delhi head Office supplied goods to its branch at Kanpur at invoice price which is cost plus 50%. All cash received by the branch is remittted to Delhi and all branch expenses are paid by the Head Office. From the following particulars rlating 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 find out the gross 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 out the gross profit and net profit made by the branch :
Rs.Stock with Branch on 1-1-1996 (at Invoice price) 60,000 Branch Debtors on 1-1-1996 12,000 Petty Cash balance on 1-1-1996 100 Goods received from Head Office (at Invoice price) 1,86,000 Goods returned to head Office 18,000 credit sales less Returns 86,000
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Cash received from Debtors 90,000 Discount allowed to Debtors 2,400 Expenses (cash paid to Head Office)Rent 2,400 Salaries 24,000Petty Cash 1,000 27,400Cash Sales 1,04,000 Stock with branch on 31-12-1996 (at Invoice price) 54,000 Petty cash balance on 31-12-1996 100
[B. Com (Pass) 1997]
Q. 14 Gurdeep & Co. Of Hyderabad have a branch at Warangal all purchases are made by the head office and goods sent to branch at are invoice at selling price which is 20% above cost. All sales by the branch are on credit terms. Branch expenses are paid by the H.O. And all cash received by the branch is remitted to H.O. All branch transactions ar recorded in the H.O. Books. The balances relating to the branch in the H.O. Books on balances relating to the branch in the H.O. Books on 1-1-2006 were as follows :
Rs.Branch Stock Account (Invoice price) 36,000 Branch Debtors Account 25,750 Transactions during the year to 31-12-2006 were :Goods sent to branch at Invoice price 3,24,600 Returns from Branch to H.O. At invoice price 6,420 Cash received from Debtors 3,10,000 Discount allowed to Debtors 5,750 Branch expenses paid by H.O. 30,000 branch Stock Account (Invoice Price) 31-12-2006 48,180Branch Debtors 31-12-2006 10,000
Prepare in the H.O. Books (a) Branch Stock Account, (b) Branch Debtors Account, (c) Branch Expenses Account and (d) Branch Adjustment Account.
[B. Com (Pass) 1993]Q. 15 Mumbai Traders Ltd. Sends goods to its Delhi branch at cost plus 25 per cent. From the following particulars you are required to prepare the Branch Stock account. Branch Stock adjustment A/c in the head office books; showing Gross Profit and net Profit.
Rs.Opening Stock at branch at invoice price 20,000 Goods sent to branch at invoice price 1,00,000 Loss in transit at invoice price 10,000 pilferage at invoice price 4,000 Sales 1,22,000 Expenses 23,000 Closing Stock at branch at invoice price 24,000 Recovered from insurance company against loss in transit 6,000
[B.Com (Pass) 2006 External]
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Stock and Debtors SystemQ. 16 Nanak Corporation Ltd. Has two branches—one at Jaipur and another at Lucknwo. Goods ae invoiced 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:
Rs. Stock on January 1, 2006 9,300 Debtors on January 1, 2006 6,800 Goods sent to Branch (at cost) 34,000 Sales at Branch Cash 25,010 Credit 31,000 Cash collected from Debtors 30,400 Goods returned by branch to H.O. 1,200 Goods transferred from Lucknow Branch to Jaipur Branch 1,500 Shortage of Stock 2,100 Shortage of Stock at Branch 450 Discount allowed to customers 200 Exenses at Branch 5,400
[B. Com (Pass) 2000 External]
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