Branch Accounting Examination Bank

[A] Stock & Debtors Method
Problem 1.
Concept & Co., with its Head Office at Mumbai has a branch at Nagpur. Goods are invoiced to the Branch at
1
cost plus 33 % . The following information is given in respect of the branch for the year ended 31st March,
3
2006:
Particulars `
Goods sent to Branch (Invoice price) 4,80,000
Stock at Branch on 1.4.2005 (Invoice price) 24,000
Cash sales 1,80,000
Return of goods by customers to the Branch 6,000
Branch expenses (paid in cash) 53,500
Branch debtors balance on 1.4.2005 30,000
Discount allowed 1,000
Bad debts 1,500
Collection from Debtors 2,70,000
Branch debtors cheques returned dishonoured 5,000
Stock at Branch on 31.3.2006 (Invoice price) 48,000
Branch debtors balance on 31.3.2006 36,500
Prepare, under the Stock and Debtors system, the following Ledger Accounts in the books of the Head Office:
(i) Nagpur Branch Stock Account
(ii) Nagpur Branch Debtors Account
(iii) Nagpur Branch Adjustment Account
Also compute shortage of Stock at Branch, if any. [May – 2006]
Solution
Dr. Branch Stock Account [Invoice price]
Particulars ` Particulars `
To Balance b/d 24,000 By Bank A/c (Cash Sales) 1,80,000
To Goods Sent to Branch A/c 4,80,000 By Branch Debtors (Credit Sales) 2,80,000
To Branch Debtors (Return) 6,000 By Abnormal Loss:
By Adjustment 500
By P/L A/c 1,500 2,000
By Balance c/d 48,000
5,10,000 5,10,000
Dr. Nagpur Branch Debtors Account

To Balance b/d 30,000 By Branch cash 2,70,000
To Branch cash (Dishonour of By Branch Stock A/c (return) 6,000
cheques) 5,000 By Branch Bad Debts 1,500
To Branch Stock A/c Credit sales 2,80,000 By Branch Discount allowed 1,000
(b.f.) By Balance c/d 36,500
3,15,000 3,15,000
Topper’s Institute Branch 5.2
Dr. Nagpur Branch Adjustment Account

To Branch Stock A/c – Abnormal 500 By opening Stock Reserve A/c
Loss (` 24,000×25%) 6,000
To Closing Stock Reserve 12,000 By Goods Sent to Branch A/c
(`48,000×25%) (` 4,80,000 × 25%) 1,20,000
To Gross Profit (c/d) (transfer to P/L 1,13,500
A/c)
1,26,000 1,26,000
Goods sent to Branch A/c

To Shop stock 100% 3,60,000 By Branch stock (133.33%) 4,80,000
To Branch adjustment A/c (33.33%) 1,20,000
4,80,000 4,80,000
Branch P/L A/c

To Abnormal Loss (cost) 1,500 By G.P. 1,13,500
To Branch Bad debt 1,500
To Branch discount 1,000
To Branch expenses 53,500
To Net profit (transfer to Gen. P/L ) 56,000
1,13,500 1,13,500
Problem 2.
P.O. Ltd. Calcutta, started a branch in Bombay on 1st April, 1983 to which goods were sent at 20% above cost.
The branch does not maintain double entry books of account and necessary accounts relating to branch are
maintained in H.O. Following further details are given for year ended on 31st March, 1984
Cost of goods sent to Branch 50,000
Goods received by Branch till 31st March, 1984 at invoice price 54,000
Credit sales for the year 58,000
Debtors as on 31st March, 1984 20,800
Bed Debts and Discount written off 200
Cash remitted to H. O. 43,000
Cash in hand at Branch on 31st March, 1984 2,000
Cash remitted by H.O. to Branch during the year 3,000
Closing stock at Branch (at invoice price) 6,000
Expenses incurred at Branch 12,000
Determine the Profit or Loss of the Branch for the year ended on 31st March, 1984, according to Stock and
Debtors system in the books of the Head Office.
Solution
Branch Stock A/c
To To To GST Branch A/c 60,000 By Branch Debtors A/c 58,000
To Branch Adj A/c (b/f) (sales above invoice 27,000 By Branch cash a/c 17,000
price) By balance c/d(60,000-54,000) 6,000
By stock in hand 6,000
870000 87000
Branch Debtors A/c

To b/d xx By Branch (B. debts & dis) 200
To Branch Stock A/c 58,000 By Branch cash A/c b/f 37,000
By balance c/d 20,800
58000 58000
Branch Adjustment A/c
To Stock reserve (clos) 2000 By Branch Stock A/c 27,000
To G.P. transfer to Branch P/L 35,000 By Goods sent to Branch 10,000
37,000 37000
Branch P/L A/c
To Branch cash a/c (exp) 12,000 By G.P. 35,000
To Branch bad debts 200
Net profit transfer to General P/L 22,800
35,000 35,000
Branch Cash A/c
To b/d xx By Cash A/c (remitted) 43,000
To Branch Debtors A/c 37,000 By Branch expenses 12,000
To H.O Cash A/c 3,000 By Bal. c/d 2000
To Branch Stock A/c (Cash sales (b/f) 17,000
57,000 57,000
Goods sent to Branch A/c

To Shop stock (100%) 50,000 By Branch Stock A/c (120%) 60,000
To Branch Adjusted A/c 20% 10,000
60,000 60,000
Problem 3.
Dreams Unlimited opened a Branch at Delhi on 1st April, 200I. The goods were sent by the Head Office to the
Branch and invoiced at selling price of the Branch which was 125% of the cost price of the head office.
The following are the particulars relating to the transactions of Delhi Branch: `
Goods sent to branch (at cost to Head Office) 2,80,000
Sales:
Cash 1,25,000
Credit 1,75,000
Cash collected from Debtors 1,56,000
Discounts allowed 4,000
Returns from Debtors 5,000
Cash sent to branch for:
Wages 3,000
Freight 11,000
Other Expenses 6,000 20,000
Spoiled cloth in bales written off at invoice price 500
Closing Stock 55,500
Ascertain the profit or loss for the Delhi Branch for the year ended 31st March, 2002 after preparing Branch
Stock Account and Branch Debtors Account.
Solution Delhi Branch Stock Account

To Goods Sent to Branch A/c 3,50,000 By Branch Debtors A/c 1,25,000
To Branch Debtors A/c
–– Returns 5,000 By Branch Cash A/c (Cash Sales 1,75,000
To Branch Adjustment A/c (Surplus) 1,000 By Branch Adjustment A/c 100
By Branch Profit & Loss Ac
(Cost of spoiled cloth) 400
3,56,000 3,56,000
Dr. Delhi Branch Debtors Account Cr.
To Branch Stock A/c (Cr. sales) 1,75,000 By Cash A/c 1,56,000
By Discounts A/c 4,000
By Branch Stock A/c (Returns) 5,000
By Balance c/f 10,000
1,75,000 1,75,000
Dr. Delhi Branch Adjustment Account Cr.
To Branch Stock A/c-Loading 100 By Goods sent to Branch A/c 70,000
To Wages (treated as Direct) 3,000 [` 3,50,000 x 25/125]
To Freight (treated as Direct) 11,000 By Branch Stock A/c (above invoice 1,000
To Closing Stock Reserve A/c price)
 25 
 55,500   11,100
 125 
To Gross Profit transferred
-to Branch P and L A/c 45,800
71,000 71,000
Dr. Delhi Branch Profit & Loss Account Cr.
To Expenses 6,000 By Branch Adjustment A/c 45,800
To Discounts 4,000 (Gross Profit)
To Branch Stock A/c
[Cost of Spoiled cloth] 400
To P and L A/c (Net Profit) 35,400

45,800 45,800
Branch Cash A/c

To Branch stock 1,25,000 By Cash A/c
To Branch debtor 1,56,000 (sent to H.O.) 2,81,000
To Cash A/c By expense
(sent by H.O.) - Wages 3,000
- Wages 3,000 - Freight 11,000
- Freight 11,000 - Other expense 6,000
- Other expense 6,000
3,01,000 3,01,000
Problem 4.
Bombay traders Ltd. sends goods to its madras Branch at cost plus 25 percent. The following particulars are
available in respect of the branch for the year ended 31st March 1988.
`
Opening stock at branch at cost to branch(I.P of H.O) 80,000
Goods sent to branch at invoice price 12,00,000
Loss in transit at invoice price 15,000
Pilferage at invoice price 6,000
Sales 12,19,000
Expenses 60,000
Closing stock at branch at cost to branch 40,000
Recovered from insurance company against loss in transit 10,000
Show ledger Accounts in the head office books for:
(a) Branch stock account (c) Goods sent to branch account
(b) Branch adjustment account (d) Branch profit and loss account
Solution Branch Stock

To Balance b/d 80,000 By loss in transit 15,000
To GST B A/c 12,00,000 By pilferage 6,000
By sales 12,19,000
12,80,000 12,80,000
To loss in transit 3,000 By Stock reserve (op) 16,000
To pilferage 1,200 By GSTB A/c 2,40,000
To Stock Reserve (clos) 8,000
To Branch P/L A/c 2,43,800
25,6000 25,6000
Goods sent to Branch
To Branch Adj. A/c 2,40,000 By Branch stock A/c 12,00,000
To Purchase (b/f) 9,60,000
12,00,000 12,00,000
Branch P/L A/c

` `
To loss in transit 12,000 By Branch Adj A/c
To pilferage 4,800 By Ins claim 10,000
To Exp 60,000 By Adj A/c 2,43,8000
To Profit 1,77,000
2,53,800 2,53,800
Problem 5.
Martin & Co. is a retail organisation with a number of branch shops. All accounts are kept at the head office,
and goods sent to branches are recorded at cost plus the expected mark up of 33 1/3 percent. The accounting
system is designed to give the head office as much control as possible over the branch stocks.
At the Calcutta branch at 1st April 1995, goods costing ` 1,200 in stock, but some of these costing ` 150, Had
been reduced in selling price to ` 160. The balances of the Calcutta debtors accounts totalled ` 920 at the same
date.
The following information relates to the Calcutta branch for the year to 31st March, 1996 at the end of that year:
`
Goods sent to branch (cost) 18,600
Cash sales (including all the goods marked down at the beginning of the year
and others costing ` 1,800 sold for half of the normal selling price) 16,060
Cash received from debtors 6,280
Goods returned by branch debtor direct to head office (selling price) 80
Bad debts written off 30
Closing stock of goods at selling price 2,400
Closing total of debtors balances 830
You are required to prepare the relevant accounts for the Calculate branch, and calculate the branch profit for
the year.
Solution
Dr. (i) Goods Sent to Branch Account Cr.
To Branch Adjustment A/c(Loading on 6,200 By Branch Stock 24,800
goods sent) By Branch Adjustment 20
To Shop stock A/c 18,600 By Shop Stock A/c 60
To Br. Debtor A/c 80 100
80 
133.33%
24,880 24,880
Dr. (ii) Branch Stock Account Cr.

To balance b/d 1,200 By Cash (Cash sales) 16,060
400 By Branch Debtors (Credit sales) 6,300
(40) 1,560 By Branch Adjustment 600
To Goods sent to Branch A/c. 24,800 By Branch P/L A/c 600
(18,600+6,200) By Abnormal loss (B. f.) 400
26,360 26,360
Dr. (iii) Branch Debtors Account Cr.
To Balance b/d 920 By Cash 6,280
To Branch Stock A/c By Bad Debts 30
(Credit sales Bal. Fig.) 6,300 By Goods Sent to Br. A/c 80
(Sales Returns)
By Balance c/d. 830
7,220 7,220
Dr. (iv) Branch Profit and Loss Account Cr.
To Bad Debts 30 By Gross Profit b/d 5,240
To Abnormal loss (Cost of Loss) (400-100) 300
To Branch Stock (Loss) 600
To Net profit transfer to General P/L A/c 4,310
5,640 5,240
Dr. (v) Branch Adjustment Account Cr.

To Branch Stock A/c 600 By Branch Stock Reserve 360
(Markdown on sales at loss) (Loading on opening stock) 6,200
To Goods Sent to Branch A/c 20 By Goods sent to Branch A/c
(Loading on Returns)
To Branch Stock Reserve 600
(Loading on closing stock)
To Shortage of Stock 100
(Loading on shortage)
To Gross profit b/d 5,240
6,560 6,560
Dr. (vi) Shortage of Stock Account Cr.
To Branch stock A/c 400 By Branch Adjustment A/c 100
(Loading)
By Branch P/L A/c (Cost) 300
400 400
Working Note:
(i) Cost = 1,800

+ Mark up 1/3 = 600
Normal S.P 2,400
Actual S.P. = ½ × 2,400 = 1,200
Discount 1,200
Profit (Loading) Cost

600 600
Bal. fig.
Branch P/L A/c
Working Note:
Cost (1200)
Cost – 150 Cost – 1050

+ MUP (1/3) 50 + MUP (1/3) 350
200 1,400
Reduced by 40
Balance Value 160 1,560
Problem 6.
Sumana Ltd. invoices goods to its various branches at cost and the branches sell for cash as well as on credit.
From the following particulars, prepare the necessary ledger accounts in the books of head office:
Stock, 1st January 10,000 Allowance to customers 400
Stock, 31st December 8,000 Bad debts 600
Debtors, 1st January 14,000 Returns from Customers 1,000
Debtors, 31 December 15,000 Remittance by Branch 46,000
Cash, 1st January 400 Wages and Salaries 4,000
Goods sent to Branch 30,000 Rent and Taxes 2,000

Goods returned by Branch 2,000 Normal loss of goods due to wastage 500
Cash Sales 30,000 Abnormal loss due to pilferage 1,500
Credit Sales 25,000 Cash remitted to Branch 4,500
Solution Branch A/c

To Balance b/d By Goods sent to Br. 2,000
- Stock 10,000 By cash A/c 46,000
- Debtor 14,000 (To H.O.)
- Cash 400 By Balance c/d
To goods sent to Branch 30,000 - Stock 8,000
To Cash A/c 4,500 - Debtor 15,000
To net Profit 17,000 - Cash A/c (W/N) 4,900
75,900 75,900
Branch Cash A/c
To Balance b/d 400 By cash A/c 46,000
To Branch Stock 30,000 By wages and salary 4,000
To cash A/c 4,500 By Rent & tax 2,000
To Branch Deb. 22,000 By Balance c/d 4,900
56,900 56,900
Branch Debtor A/c
To Balance b/d 14,000 By Discount 400
To Mom. Branch stock 25,000 By bad debt 600
By Br. Stock 1,000
By Cash A/c 22,000
39,000 39,000
Branch Stock A/c
To Balance b/d 10,000 By Branch Cash A/c 30,000
To Branch debtor 1,000 By Br. Debtor 25,000
To goods sent to Br. 30,000 By Good Sent to Br. 2,000
To wages 4,000 By Abnormal loss 1,500
To gross/profit 21,500 By Balance c/d 8,000
41,000 66,500
Branch P/L A/c
To Rent & tax 2,000 By Gross Profit 21,500
To Abnormal loss 1,500
To Bad debts 600
To allowance 400
To net Profit 17,000
21,500 21,500
Problem.7
Give Journal Entries in the books of Branch A to rectify or adjust the following. :
(i) Head Office expenses ` 3,500 allocated to the Branch, but not recorded in the Branch Books.
(ii) Depreciation of branch assets, whose accounts are kept by the Head Office not provided for ` 1,500.
(iii) Branch paid ` 2,000 as salary to a H.O. Inspector, but the amount paid has been debited by the Branch
to Salaries account.
(iv) Head Office collected ` 10,000 directly from a customer on behalf of the Branch, but no intimation to
this effect has been received by the Branch.
(v) A remittance of ` 15,000 sent by the Branch has not yet been received by the Head Office.
(vi) Branch A incurred advertisement expenses of ` 3,000 on behalf of Branch B. [Nov – 2004]
Solution In the books of branch A
Journal Entries
Date Particulars ` `
(i) Expenses A/c Dr. 3,500
To Head office A/c 3,500
(Being H.O. expenses allocated to branch)
(ii) Depreciation A/c Dr. 1,500
To Head Office A/c 1,500
(Being the depreciation charged)
(iii) Head office A/c Dr. 2,000
To Salaries A/c 2,000
(Being the rectification of salary A/c which is paid on
behalf of H.O.)
(iv) Head office A/c Dr. 10,000
To Debtors A/c 10,000
(Being adjustment of Amount, collected from branch
debtors)
(v) Cash in transit A/c Dr. - -
To H.O. A/c
(vi) Head Office A/c Dr. 3,000
To Cash A/c 3,000
(Being the advertisement expenditure incurred by
Branch A of Branch B.)
Problem. 8
From the following information, prepare Delhi Branch Account in the books, of head office for the year ending
on 31st March 2001
Opening Stock (at cost) 1,78,000 Discount allowed to Customers 500
Opening Debtors 14,000 Bad Debts written off 1,000
Opening Petty Cash 250 Credit sales 7,29,400
Furniture (in the beginning) 6,000 Cash Sales 32,000
Opening Creditors 6,000 Petty Expenses paid by Branch 8,000
Goods sent to Branch (at Cost) 5,22,000 Cheques sent to Branch for expenses:
Goods returned by Branch to Salaries 30,000
H.O (at cost) 7,800 Rent and Insurance 12,000
Goods returned by Customers Petty Cash 7,870
to Branch 5,700
Cash received by Branch from,
its Customers 6,11,000
Goods are sold to customers at cost price + 50%. Depreciate the furniture @ 10% p.a.
Solution
Dr. Delhi Branch Account in the books of H.O. Cr.
To Balance b/d: By Balance b/d: creditors 6,000
Stock 1,78,000 By Cash Sales 32,000
Debtors 14,000 Collection from debtors 6,11,000
Less: Pay to Creditors (6,000) 6,37,000
Petty Cash 250 By Goods sent to Branch A/c
Furniture 6,000 (return by branch) 7,800
To Goods sent to Branch A/c 5,22,000 By Balance c/d:
To Bank A/c (Remittance to Branch) Stock 1,88,400
Salaries 30,000 Debtors 1,25,200
Rent and Insurance 12,000 Petty Cash 120
Petty Cash 7,870 49,870 Furniture (` 6,000 - ` 600) 5,400
To Net Profit t/f to General P & L A/c 1,99,800
9,75,920 9,75,920
Working Notes
(i)
Memorandum Branch Stock A/c
Particulars Amount Particulars Amount

To B/d 178000 By Credit Sales 729400
To Goods Sent to Branch 522000 By Cash Sales 32000
Less: Return from customer (5700)
To Gross Profit By Goods Returned by Branch 7800
(755700 × 50/150) 251900 By Closing stock (b/f) 188400
971900 971900
(ii) Dr. Memorandum Branch Debtors Account Cr.
To Balance b/d 14,000 By Returns to Branch 5,700
To Credit Sales 7,29,400 By Discount allowed 500
By Bad Debts 1,000
By Cash received by Branch 6,11,000
By Balance c/d 1,25,200
7,43,400 7,43,400
(iv) Dr. Memorandum Branch Petty Cash Account Cr.
To Balance b/d 250 By Petty Expenses A/c 8,000
To Remittance from H.O. 7,870 By Balance c/d 120
8,120 8,120
Problem 9.
The following information and particulars relate to New Delhi Branch for the year 1989 - 1990
31/3/1989 (` ) 31/3/1990 (`)
Stock 50,000 75,000
Debtors 70,000 95,000
Petty Cash 250 120
Goods costing ` 5,50,000 was sold by the Branch @ 25% on cost. Cash sales amounted to `1,50,000 and the
rest credit sales. Branch spent ` 30,000 for salaries, `12,000 for rent and ` 8,000 for petty expenses (all
expenses were remitted by Head Office)
You are requested to show the New Delhi Branch Account in the books of Head office for the year 1989-90 and
prove your Solution by preparing a Branch Trading and Branch P/L A/c.
Solution
Dr. New Delhi Branch Account Cr.
To Opening Balances: By Cash A/c [Sent to H.O.)
Branch Stock 50,000 Cash Sales 1,50,000
Branch Debtors 70,000 Collection from Debtors 5,12,500 6,62,500
Branch Petty Cash 250 By Closing Balances:
To Goods sent to Branch. (W/N i) 5,75,000 Branch stock 75,000
To Cash: (sent by H.O.) Branch Debtors. 95,000
Salaries 30,000 Branch Petty cash. 120
Rent 12,000
Petty Exp. (W/N) 7,870 49,870
To Net Profit 87,500
8,32,620 8,32,620
Working Notes:
Dr. (i) Memo. Branch Stock A/c. (at cost) Cr.
To Balance b/d 50,000 By Cost of goods sold 5,50,000
To Goods sent by H.O.(Balancing figure) 5,75,000 By Balance c/d. 75,000
6,25,000 6,25.000
All expense are paid by H.O., therefore it is duty of Branch to sent all cash sales & coll. From debtor to H. O.
No mark up for Goods sent is given, there fore we will assume goods sent at cost price to branch.
Dr. (ii) Memo. Branch Debtors A/c. Cr.

To Balance b/d 70,000 By Cash (Bal. fig.) 5,12,500
To Credit sales 5,37,500 By Balance c/d. 95,000
6,07,500 6,07,500
Dr. (iii) Branch Petty Cash A/c. Cr.

To Balance b/f 250 By Petty Expenses'(paid by branch) 8,000
To Cash (Received from H.O.) By Balance c/d. 120
Balancing figure. 7,870
8,120 8,120
Note: Total Sales = 5,50,000 + 1,37,500 = ` 6,87,500
Credit Sales = 6,87,500 –1,50,000 = ` 5,37,500
Branch Trading and Profit & Loss A/c

Dr. (for the year ended 31st March, 89) Cr.
To Opening Stock 50,000 By Sales:
To Goods sent to branch 5,75,000 Cash sales 1,50,000
To Gross Profit c/d. 1,37,500 Credit Sales 5,37,500
_______ By Closing stock 75,000
7,62,500 7,62,500
To Salaries. 30,000 By Gross Profit b/d 1,37,500
To Rent. 12,000
To Petty Expenses. 8,000
To Net profit 87,500
1,37,500 1,37,500
Problem 10.
Shahrukh Ltd. of Delhi has a branch at Bhivani. Goods are invoiced to the branch at cost plus 25%. The branch
does not maintain account books and all collections at the branch are remitted to head office. The expenses of
the branch are reimbursed by the office. From the following particulars, prepare the branch account in the books
of head office for the six months ending on 30th September, 2001.
Opening Stock Bad debts 400
(at cost to head office) 55,000 Trade discount to customers
Opening Debtors 15,000 (already taken into account
Opening Furniture 12,000 while invoicing) 12,000
Opening Petty Cash 500 Goods sent to branch on 27.9.2001,
Transactions for six months: received by branch on 5.10.2001 1,500
Goods received from head office 2, 25,000 Cash sent to branch for expenses 10,500
Cash sales 1, 95,000 Cash discount allowed to customers 800
Credit sales 80,000 Balances on 30.9.2001:
Goods returned to head office 12,750 Stock 5,600
Normal loss 1,000 Debtors ?
Sales returns by customers Petty cash 500
to branch 500 Depreciate Furniture @ 20%.
Bills receivable received from
customers at branch 15,000
Solution Bhivani Branch Account
To Opening Balances: By Stock reserve, 13,750
Stock (` 55,000 + ` 13,750) 68,750 By Bank (Remittance):
Debtors 15,000 Cash sales 1, 95,000
Furniture. 12,000 Cash from debtors 50,000 2, 45,000
Petty cash 500 By Goods sent to Branch
To Goods. sent to branch A/c 2,26,500 (returns to HO) 12,750
(` 2,25,000 + ` 1,500) By Goods sent to branch A/c
To Bank (expenses) 10,500 2,26,500 × 1/5 45,300
To Stock Reserve (1/5 of ` 7,100) 1,420
To Net Profit transferred to By Closing Balances:
Profit and Loss A/c 41,280 Debtors 28,300
To Goods sent to Branch 2,550 Stock (` 5,600 + ` 1,500) 7,100
(12,750 × 1/5) Bills receivable 15,000
Furniture (12,000 × 90%) 10,800
Petty cash 500
3,78,500 3,78,500
Working Note: (1)

Dr. Memorandum Branch Debtors Account Cr.
To Balance b/d 15,000 By Sales returns 500
To Credit sales 80,000 By Bad debts' 400
By Bills receivable 15,000
By Bank 50,000
By Discount 800
By Balance c/d (b.f.) 28,300
95,000 95,000
Problem. 11
Ram of Chennai has a branch at Nagpur to which office, goods are invoiced at cost plus 25%. The branch
makes sales both for cash and on credit. Branch expenses are paid direct from Head Office and the branch has
to remit all cash received into the Head Office Bank Account at Nagpur.
From the following details, relating to the year 2013, prepare the accounts in Head Office Ledger and ascertain
Branch Profit as per stock and debtors method. Branch does not maintain any books of accounts, but sends
weekly returns to head office:
`
Goods received from head office at invoice price 1,20,000
Returns to head office at invoice price 2,400
Stock at Nagpur branch on 1.1.2013 at invoice price 12,000
Sales during the year – Cash 40,000
Credit 72,000
Debtors at Nagpur branch as on 1.1.2013 14,400
Discounts allowed to debtors 1,200
Bad debts during the year 800
Sales returns at Nagpur branch 1,600
Salaries and wages at branch 12,000
Rent, rates and taxes at branch 3,600
Office expenses at Nagpur branch 1,200
Stock at branch on 31.12.2013 at invoice price 24,000
[P.M. Page No. 8.27, Q.15]
Solution Goods sent to Branch A/c
To Shop stock (100%) 96,000 By Branch stock A/c 1,20,000
To Branch Adjustment By Shop stock (100%) 1,920
 25  By Branch Adjustment 480
1,20,000   24,000 25
 100  2,400 
To Branch stock (return) (125%) 2,400
125
1,20,000 1,20,000
Branch Stock A/c

To Balance b/d 12,000 By Branch Cash 40,000
To Goods sent to Branch 1,20,000 By Branch debtors 72,000
To Branch debtor (sales return) 1,600 By Goods sent to Branch (return to
To Branch Adjustment A/c (b/f) 4,800 H.O.) 2,400
By c/d 24,000
1,38,400 1,38,400
Branch Debtors A/c
To Balance b/d 14,400 By Branch Cash 64,000
To Branch stock 72,000 By Branch discount 1,200
By Branch Bad debts 800
By Branch Stock 1,600
By c/d 18,800
86,400 86,400
Branch Cash A/c
To b/d - By Cash A/c 1,04,000
To Branch stock ( Cash sales) 40,000 (sent to H.O.)
To Branch Debtor 64,000 By Branch expenses
To Cash A/c 16,800  S&W 12,000
(Sent to Branch by H.O.)  Rent 3,600
 Office expense 1,200
1,20,800 1,20,800
To Goods sent to By OSR
 1
12,000 
25
Branch  2,400   480 2,400
 5 125
To Closing S.R. By Goods sent to Branch
By Branch Stock 24,000
 25  4,800
 24,000   4,800
 125 
To G.P. transfer to Branch P/L A/c
25,920
31,200 31,200
Branch P/L A/c
To Branch discount 1,200 By G.P. 25,920
To Branch Bad debts 800
To Branch expense:
 S&W 1,200
 Rent 3,600
 Office expense 1,200
To Net profit transfer to General
P/L A/c 7,120
25,920 25,920
Problem. 12
Sell Well who carried on a retail business opened a branch X on January 1st , 2013 where all sales were on credit
basis. All goods required by the branch were supplied from the Head Office and were invoiced to the branch at
10% above cost.
The following were the transactions:
Jan. ‘2013 Feb. ‘2013 March ‘2013

` ` `
Goods sent to Branch (Purchase Price) 40,000 50,000 60,000
Sales as shown by the branch monthly report 38,000 42,000 55,000
Cash received from Debtors and remitted to H.O. 20,000 51,000 35,000
Returns to H.O. (Invoice price to Branch) 1,200 600 2,400
The stock of goods held by the branch on March 31, 2013 amounted to ` 53,400 at invoice to branch. Record
these transactions in the Head Office books, showing balances as on 31st March, 2013 and the branch gross
profit for three months ended on that date.
All workings should form part of your solution
[P.M. Page No. 8.21, Illus.8]
Solution Branch Stock A/c
To Balance b/d Nil By Goods sent to Branch (return) 4,200
To Goods sent to Branch 1,65,000 By Sales Branch debtor 1,35,000
(1,50,000 + 10%) By c/d 53,400
To Branch Adjustment A/c 27,600
1,92,600 1,92,600
Branch Debtor A/c
To Balance b/d Nil By Branch Bank 1,06,000
To Branch Stock 1,35,000 By c/d 29,000
1,35,000 1,35,000
 10  By OSR Nil
To C.S.R.  53,400   4,855 By Goods sent to Branch 15,000
 110  By Branch Stock (Sales above I.P.) 27,600
To Goods sent to Branch
 10 
 4,200   382
 110 
To Gross Profit
37,363
42,600 42,600
Problem. 13
Modi Sales Ltd. Modinagar has branch at Delhi. Goods are supplied to branch at a profit of 20% on sale price.
A/cs are kept at head office from where all expenses (except petty expenses) are paid. Such petty expenses are
paid by the branch which is allowed to maintain petty cash balance of ` 500 on imprest system. From the
following balances as shown by books, prepare Branch A/c.
Balance as on 1st Jan., 1992:
Petty cash in hand at Branch 500 Cash paid by branch to creditors 8,000
Creditors as on 31.12.1992 3,000
Stock at Invoice price 20,000 Payments made by H.O.:
Sundry Debtors at Branch 4,000 Rent for one year (Paid on 1st April 92) 2,000
Sundry Creditors at Branch 1,200 Salaries 3,000
Furniture at Branch 10,000 Insurance paid for the year ending 31st
Rent prepaid (up to 31st March 1992) 400 March, 1993 800
Transactions for the year ended Payment made by Branch:
31st Dec., 1992 were follows: Petty Expenses 300
Goods sent to Branch 1,05,000 Balance on 31 Dec., 1992
Cash Sales at Branch 80,000 Stock at cost 30,000
Credit Sales at Branch 45,000 (Cost of goods supplied by H.O.)
Allowances to Debtors 500 Write off Dep. @ 10% p.a. on furniture.
Bad debts written off 200
Collection from Debtors 40,000
Solution
Delhi Branch Account
Dr. (for the period from 1.1.1992 to 31.12.1992) Cr.
To Opening Balances: By Opening Balances:
Petty Cash 500 Creditors 1,200
Stock 20,000 By Cash (remitted by Branch) 1,12,000
Debtors 4,000 By Stock Reserve
Furniture 10,000 (20,000  20/100) 4,000
Prepaid Rent 400 34,900 By Goods sent to Branch
To Goods sent to Branch 1,05,000 (1,05,000  20/100) 21,000
To Cash : By Closing Balance:
Rent 2,000 Petty Cash 500
Salaries 3,000 Stock 37,500
Insurance 800 5,800 Debtors 8,300
Furniture 9,000
To Cash (Petty Expenses) 300 Prepaid rent 500
To Stock Reserve (37,500  20 /100 7,500 Prepaid Insurance 200
To Closing Balance Creditors 3,000
1,94,200 1,94,200
Working Notes:
(i) Calculation of Closing Debtors.
Dr. Memorandum Branch Debtors Account Cr.
To Balance b/f 4,000 By Allowances 500
To Sales (Credit) 45,000 By Cash Received 40,000
By Bad Debts 200
49,000 49,000
(ii) Petty cash is maintained on imprest system, Head Office will reimburse petty expenses paid by Branch.
Therefore, closing balance of petty cash will remain at ` 500.
(iii) Calculation of cash remitted by Branch to Head Office.
Cash Sales 80,000

Collections from Debtors 40,000
1,20,000
Less: Paid to Creditors 8,000
Cash remitted to H.O. 1,12,000
(iv) Prepaid Rent as on 31.12.92
Rent paid for the period from 1.4.92 to 31.3.93 2,000

Prepaid for 3 months (2000  3/12) 500
Problem. 14
Widespread Ltd, invoices goods to its branch at cost plus 20% The branch sells goods for cash as well as on
credit The branch meets its expenses out off cash collected from its debtors and cash sales and remits the
balance of cash to head office after withholding ` 10,000 necessary for meeting immediate requirements of
cash, On 31st March, 2012 the assets at the branch were as follows:
` ('000)
Cash in Hand 10
Trade Debtors 384
Stock, at Invoice Price 1,080
Furniture and Fitting 500
During the accounting year 31st March, 2013 the invoice price of goods dispatched by the head office to the
branch amounted to ` 1 crore 32 lakh, Out of the goods received by it, the branch sent back to head office goods
invoiced at ` 72,000, Other transactions at the branch during the year were as follows:
` ('000)
Cash Sales 9,700
Credit Sales 3,140
Cash collected by Branch from Credit Customers 2,842
Cash Discount allowed to Debtors 58
Returns by Customers 102
Bad Debts written off 37
Expenses paid by Branch 842
On 1st January 2013 the branch purchase new furniture for ` 1 lakh for which payment was made by head office
through a cheque.
On 31st March, 2013 branch expenses amounting to ` 6,000 were outstanding and cash in hand was again `
10,000, Furniture is subject to depreciation @ 16% per annum on diminishing balances method.
Prepare Branch Account in the books of head office for the year ended 31st March, 2013.
Solution Branch A/c

To b/d By O.S.R.
 Cash 10  20 
 Debtor 384 1,080   180
 Stock 1,080  120 
 F&F 500 By Goods sent to Branch(return) 72
To Goods sent to Branch 13,200 By Cash A/c 11,700
To Bank A/c (sent to Branch) 100 By Goods sent to Branch
To Goods sent to Branch  20 
13,200  
 20   120  2,200
 72   12
 120  By c/d
To C.S.R.  Stock
 Debtors 1,470
20 485
1,470   Cash
120 245  Furniture 10
To c/d 516
 o/s Liab.
To N.P. 6
1,096
16,621 16,621
Furniture A/c

To b/d 500 By Dep.
To Bank 100  500 × 16% 80
 100 ×16% × 3/12 4
By c/d 516
600 600
Branch Debtors A/c

To b/d 384 By Cash dis. 58
To Branch Stock 3,140 By Cash collected 2,842
By return 102
By bad debts 37
By c/d (b/f) 485
3,524 3,524
Branch Cash A/c

To b/d 10 By Branch expense 842
To Branch Stock 9,700 By Remittance to H.O. (b/f) 11,700
To Branch Debtors 2,842 By balance c/d 10
12,552 12,552
Branch Stock A/c

To b/d 1,080 By Cash Sales 9,700
To Goods received from H.O. 13,200 By Credit Sales 3,140
To Good returned by customers 102 By returned to H.O. 72
By c/d 1,470
14,382 14,382
Problem. 15
Red and White of Mumbai started a branch at Bangalore on 1.4.2012 to which goods were sent at 20% above
cost. The branch makes both cash sales and credit sales. Branch expenses are met from branch cash and balance
money remitted to H.O. The branch does not maintain double entry books of account and necessary accounts
relating to branch are maintained in H.O. Following further details are given for the year ending on 31.3.2013:
`
Cost of goods sent to branch 1,00,000
Goods received by branch till 31.3.2013 at Invoice price 1,08,000
Credit sales for the year 1,16,000
Closing debtors on 31.3.2013 41,600
Bad debts written off during the year 400
Cash remitted to H.O. 86,000
Closing cash on hand at branch on 31.3.2013 4,000
Cash remitted by H.O. to branch during the year 6,000
Closing stock in hand at branch at invoice year 12,000
Expenses incurred at branch 24,000
Draw up the necessary Ledger Accounts like Branch Debtors Account, Branch Stock Account, Goods sent to
Branch Account, Branch Cash Account, Branch Expenses Account and Branch Adjustment A/c for ascertaining
gross profit and Branch Profit and Loss P/L for ascertaining Branch profit. [P.M. Page No. 8.20, Q.11]
Problem. 16
Following is the information of the Jammu branch of Best Ltd., New Delhi for the year ending 31 st
March 2010 from the following:
(1) Goods are invoiced to the branch at cost plus 20%.

(2) The sale price is cost plus 50%.
(3) Other information: `
Stock as 01-04-2009 2,20,000
Goods sent during the year 11,00,000
Sales during the year 12,00,000
Expenses incurred at the branch 45,000
Ascertain (i) the profit earned by the branch during the year (ii) branch stock reserve in respect of unrealized
profit. [Nov.-2010]
Solution (i) Calculation of profit earned by the branch

In the books of Jammu Branch
Trading Branch
Particulars Amount (` ) Particulars Amount (`)
To Opening Stock 2,20,000 By Sales 12,00,000
To Goods sent to branch A/c 11,00,000 By Closing stock (b/f) 3,60,000
To Gross profit c/d (12,00,000× 30/150) 2,40,000
15,60,000 15,60,000
To expense 45,000 By Gross profit 2,40,000
To Net profit 1,95,000
2,40,000 2,40,000
(ii) Closing Stock reserve in respect of unrealized profit = ` 3,60,000 × (20/120) = ` 60,000
Opening stock reserve = 22000 × 20/120 = 36,667
Problem. 17
T of Calcutta has a branch at Dibrugarh. The branch does not maintain separate books of accounts. The branch
has the following assets and liabilities on 31st August, 1997 and 30th September 1997.
Particulars 31 st August 1997(`) 30th September 1997(`)
Stock of tea 1,80,000 1,50,000
Advance to suppliers 5,00,000 4,50,000
Bank Balance 75,000 1,00,000
Prepaid expenses 10,000 12,000
Outstanding expenses 13,000 11,000
Creditors for purchase 3,00,000 to be ascertained
During the month, Dibrugarh branch.

(a) Received by electronic mail transfer ` 10,00,000 from Calcutta head office:
(b) Purchased tea worth ` 12,00,000;
(c) Sent tea costing ` 12,30,000 to Calcutta freight of ` 80,000 being payable at the destination by the receiver;
(d) Spent ` 25,000 on office expenses.
(e) Paid ` 3,00,000 as advanced to suppliers;
(f) Paid ` 6,50,000 to suppliers in settlement of outstanding dues.
In addition T informs you that the Calcutta office has directly paid ` 3,50,000 to Dibrugrh supplies by
cheques drawn on bank accounts in Calcutta during the month.
T informs you that for the purpose of accounting, Dibrugarh branch is not treated as an outsider. He wants
you to write the detailed accounts relating to the transactions of the Dibrugarh branch as would appear in the
books of Calcutta Head Office. [Nov-1997]
Solution Branch Stock Account

To Balance b/d 1,80,000 By Goods Received 12,30,000
To Branch Creditors 12,00,000 from Branch
13,80,000 13,80,000
Dr. Branch Advance to Creditors A/c Cr.
To Balance b/d 5,00,000 By Creditors(Adjustment.) 3,50,000
To Branch Bank. 3,00,000 By Balance c/d 4,50,000
8,00,000 8,00,000
Dr. Branch Creditors Account Cr.
To BranchAdvance to 3,50,000 By Balance b/d 3,00,000
Creditor By Branch stock. (Purchases) 12,00,000
To Branch Bank 6,50,000
To Cash (payment by H.O.) 3,50,000
To Balance c/d. 1,50,000
15,00,000 15,00,000
Dr. Branch Bank Account Cr.
To Balance b/d 75,000 By Advance to Suppliers 3,00,000
To Cash A/c (H.O.) 10,00,000 By Creditors 6,50,000
By Expenses. 25,000
10,75,000 10,75,000
Dr. Branch Expenses Account Cr.
Particulars ` Particulars. `
To Prepaid Exps. At begning 10,000 By Outstanding Exps.at beginning 13,000
To Branch Bank. 25,000 By Prepaid Exps. 12,000
To Outstanding Exps. At end 11,000 By Profit and Loss 21, 000
46,000 46,000
Problem. 18
M/s Bright &., Co with its head office in Madras, invoiced goods to its branch at Bombay, at 20% less than the
catalogue price which is cost plus 50%, with instructions that cash sales were to be made at invoice price and
credit sales at catalogue price. Discount on credit sale at 15% on prompt payment will be allowed. From the
following particulars available from the branch, prepare the branch trading and profit and loss account for the
year ended 31st March, 1992 in the head office books, so to show the actual profit / loss of the branch for the
year.
Stock 1.4.1991 (Invoice price) 12,000 Discount allowed to debtors 13,365
Goods received from head office Expenses at the branch 6,000
(invoice price ) 1,32,000 Remittance to head office 1,20,000
Debtors on 1.4.1991 10,000 Debtors on 31/3/1992 11,000
Sales (Cash ) 46,000 Cash in hand on 31/3/1992 5,635
Sales (Credit) 1,00,000 Stock on 31/3/1992 (invoice price) 15,000
Cash realised from debtors 85,635
It was reported that a part of stock at the branch was lost by fire during the year whose value is to be
ascertained; and provision should be made for discount to be allowed to debtors as on 31st March, 1992 on the
basis of the year’s trend of prompt payment.
Solution Trading and Profit & Loss Account

For the year ended 31 st March, 1992
To Opening Stock(12,000×100/120) 10,000 By Sales
To Goods received from Cash 46,000
H.O. (1,32,000 × 100/120) 1,10,000 Credit 1,00,000 1,46,000
To Gross Profit c/d 41,000 By loss of Stock by
Fire (B/f) 2,500
_______ By Closing Stock (15,000×100/120) 12,500
1,61,000 1,61,000
To Branch Expenses 6,000 By Gross Profit b/d 41,000
To Discount allowed 13,365
To Provision for Discount (W/N) 1,485
To Abnormal loss 2,500
To General Profit & Loss A/c 17,650
41,000 41,000
Cost Cost Consume

100% price 150%
100%
I.P.
Credit
100% Sales
Discount 15%
for prompt payment
Working Note
G.P = Sales× G.P. Ratio
Cash sales = 46,000×20/120 = 7,667
Credit sales = 10,0,000×50/150=33,333
Total G.P. 41,000
Debtors A/c
To balance b/d 10,000 By cash A/c 85,635
To credit sales 1,00,000 By Discount 13,365
1,10,000 1,10,000
Year trend:
Total Debtor Settlement Discount
P.Y. 99,000 13,365
N.Y. 11,000 ?
13,365/99,000×11,000 = 1,485 – Provisions to be made on the basis of past year trend.
Problem. 19
A Ltd. has its head office at New Delhi and two branches at Calicut and Mangalore. The branches purchase
goods independently. The Calicut branch makes a profit of 33-1/3% on cost while the Mangalore branch makes
a profit of 20% on sales. Goods are also supplied by one branch to another at the respective sales price. From
the following particulars, prepare the Trading and Profit and Loss Account of each of the branches and find out
the profit or loss made by each of them after taking into account the reserve for unrealized profits:
Particulars Calicut Branch (`) Mangalore Branch (`)
Opening Stock 80,000 60,000
Purchases (including Inter Branch Transfers) 4,00,000 5,00,000
Sales 5,60,000 5,91,250
Chargeable Expenses 30,000 55,000
Closing Stock 60,000 87,000
Office and Adm. Expenses 26,500 14,000
Selling and Distribution Expenses 30,000 20,000
Information:
(i) Opening stock at Calicut Branch includes goods of ` 20,000 taken from Mangalore Branch.
(ii) Opening stock at Mangalore Branch includes goods of ` 34,000 taken from Calicut Branch at cost to
receiving branch.
(iii) The Calicut Branch sales include transfer of goods to Mangalore Branch at selling price ` 40,000.
(iv) The sales at Mangalore Branch include transfer of goods to Calicut Branch at selling price ` 30,000.
(v) Closing stock at Calicut Branch includes goods received from Mangalore Branch ` 10,000.
(vi) Closing stock at Mangalore Branch includes goods of ` 8,000 received from Calicut Branch.
Solution Calicut Branch Trading and Profit and Loss Account

Dr. for the year ending on... Cr.
To Opening Stock By Sales (including ` 40,000 to M. Branch) 5,60,000
(including ` 20,000 from M. Branch) 80,000 By Closing Stock
To Purchases 4,00,000 (including ` 10,000 from M. Branch) 60,000
To Chargeable Expenses 30,000
To Gross Profit c/d
(before making adjustment

for unrealised profit) l,10,000 _______
6,20,000 6,20,000
To Stock Reserve (for unrealised By Gross Profit b/d l,10,000
profit in Closing Stock lying at By Stock Reserve
unrealised Mangalore Branch) profit in Opening Stock lying
(` 8,000  25/100) 2,000 at Mangalore Branch) 8,500
To Office & Adm. Expenses 26,500 (` 34,000  25/100)
To Selling & Distribution Expenses 30,000
1,18,500 1,18,500
Mangalore Branch Trading and Profit and Loss Account

Dr. for the year ending on....... Cr.
To Opening Stock 60,000 By Sales 5,91,250
(including ` 34,000 from C. Branch) (including ` 30,000 to C. Branch)
To Purchases 5,00,000 By Closing Stock 87,000
To Chargeable Expenses 55,000 (including ` 8,000

To Gross Profit c/d 63,250 from C. Branch)
(before making adjustment for _______ _______
unrealised profit) 6,78,250 6,78,250
By Gross Profit b/d 63,250
To Stock Reserve (for unrealised profit on By Stock Reserve (for unrealised profit
Closing Stock lying at Calicut Branch) Closing Stock lying at Calicut Branch)
[` 10,000  20/100] 2,000 [` 20,000  20/100] 4,000
To Office & Adm. Exp. 14,000
To Selling & Distribution Expenses 20,000
67,250 67,250
Problem. 20
M/s Maheshwari Bros. with their head office at Bombay have a branch at Sholapur. They supply goods to its
branch at selling price less 20%. The company as well as the branch sell goods to their consumers at profit of
100% on cost. Maheshwari Bros. also sell goods to their approved stockiest at the same price at which they are
selling to their branch at Sholapur. From the following particulars prepare trading accounts of the head office
and of the branch for the second year of their business and show the provision for unrealized profits of stock at
the branch comprising of goods supplied by the head office.
Particulars Head office (`) Branch (` )
Stock in the beginning 3,000 160
Purchase during the year 25,600
Goods sent to the branch 4,000
Goods received from the H. O. 4,000
Goods sold to approved stockiest 6,000
Goods sold to customers 12,000 3,600
Expenses 200 100
Solution Trading & P/L A/c

Particulars H.O Branch H.O Branch
To op Stock 3,000 160 By Sales
To Purchase 25,600 Stock 6000
To GR from H.O. 4,000 Customer 12,000 3,600
To G. Profit 9,750 720 GSTB A/c 4,000 ---
C. Stock 16,350 1,280
38,350 4,880 38,350 4,880
To Exp 200 100 By G.P 9,750 720
To Stock Reserve 480 By Stock reserve (op.) 60
(1,280× 60/160) (160 × 60/160)
To Net profit 9,130 620

9,810 720 9,810 720
Working Note Calculate Of Stock (Closing)

Particulars ` `
Opening stock 3,000 160
+ Purchase 25,600
+ GRF H.O 4,000
(-) GST B A/c (2,500)
(-) Sales :-
Stock (3,750)
Customer (6,000) 2,880
C. stock 16,350 1,280
32,7000 8320
Working Note. 1
Cost =100
+ Total profit =100
Selling price 200
Less: Reduction for dealer (200×20%) 40

Whole sale price (dealer price) 160
Working Note.2
Calculation of G.P. = Sales × G.P. Ratio
H.O.
Sales to customer = 12,000×100/200 = 6,000
Sales to Branch = 4,000×60/160 = 1,500
Sales to stockiest = 6,000×60/160 = 2,250
Total G.P. 9,750
Branch:
Sales to customer = 3600×40/200 = 720
Problem. 21
New Textiles Limited operate a number of retail shops to which goods are invoiced at wholesale price which is
cost plus 20%. Shops sell the goods at the list price which is wholesale price plus 10%. From the following
particulars ascertain the profit or loss for 2002 at shop No. 143. `
Stock at shop on January 1,2002 15,000
Goods invoiced to shop during 2002 1,40,000
Sale at the shop during the year 1,54,770
Goods destroyed by accident (retail value) 660
Expenses at the shop 7,200
Solution Trading A/c of Shop
To opening stock 15,000 By sales 1,54,770
To GRF H.O. 1,40,000 By Goods Lost(660 × 120/132) 600
To Gross profit(1,54,770×12/132) 14,070 By C. Stock (b/f) 13,700
1,69,070 1,69,070
To Expenses 7,200 By G.P 14,070
To Loss by accident (abnormal 600
loss)
To Net profit 6,270
14,070 14,070
Problem. 22
Beta Ltd. having head office at Mumbai has a branch at Nagpur. The head office does wholesale trade only at
cost plus 80%. The goods are sent to branch at the wholesale price viz. cost plus 80%. The branch at Nagpur is
wholly engaged in retail trade and the goods are sold at cost to H. O. plus 100%.
Following details are furnished for the year ended 31st March, 2013:
Head Office Branch
` `
Opening Stock (as on 1.4.2012) 2,25,000 -
Purchases 25,50,000 -
Goods sent to branch (Cost to H. O. plus 80%) 9,54,000 -
Sales 27,81,000 9,50,000
Office Expenses 90,000 8,500
Selling Expenses 72,000 6,300
Staff Salary 65,000 12,000
Required: Prepare trading and profit and loss Account of the Head office and Branch for the year ended 31st
march, 2013.
Solution Trading and Profit and loss A/c of Beta Ltd.

For the year ended 31 st March 2013
Particulars H. O. Branch Particulars H. O. Branch
` ` ` `
To Opening Stock 2,25,000 - By Sales 27,81,000 9,50,000
To Purchase 25,50,000 - By Goods sent to branch 9,54,000 -
To Goods received from By Closing Stock(b/f) 7,00,000 99,000
head office - 9,54,000
To Gross Profit (w/n) 16,60,000 95,000
44,35,000 10,49,000 44,35,000 10,49,000
To Office Expenses 90,000 8,500 By Gross Profit b/d 16,60,000 95,000
To Selling Expenses 72,000 6,300
To Staff Salaries 65,000 12,000
To Closing Stock Reserve 44,000 -
To Net Profit 13,89,000 68,200
16,60,000 95,000 16,60,000 95,000
Working Notes
(i) Gross Profit of Branch = ` 9,50,000 × 20/200= 95,000
(ii) Gross Profit of H.O. = ` (27,81,000+9,54,000) × 80/100= 16,60,000
Problem. 23
XYZ Company is having its Branch at Kolkata. Goods are invoiced to the branch at 20% profit on sale. Branch
has been instructed to send all cash daily to head office. All expenses are paid by head office except petty
expenses which are met by the Branch Manager. From the following particulars prepare branch 'account in the
books of Head Office.
Stock on 1st April 2010 (invoice price) 30,000 Discount allowed to debtors 160
Sundry Debtors on 1st April, 2010 18,000 Expenses paid by head office :
Cash in hand as on 1st April, 2010 800 Rent 1,800
Office furniture on 1st April, 2010. 3,000 Salary 3,200
Good invoiced from the head office Stationary & Printing 800
(invoice price) 1,60,000 Petty exp. Paid by the branch 600
Goods return to Head Office 2,000 Depreciation to be provided on
Goods return by debtors 960 branch furniture at 10% p.a
Cash received from debtors 60,000 Stock on 31st March, 2011 (at
Cash Sales 1,00,000 invoice price) 28,000
Credit sales 60,000
[May-2011]
Solution Kolkata Branch A/c
To b/d By Goods sent to H.O. 2,000
Stock (IP) 30,000 By Cash:
Debtor 18,000 Cash sales 1,00,000
Cash 800 Collection from debtor 60,000 1,60,000
Furniture 3,000
To Goods sent to Branch 1,60,000 By c/d
Petty cash (800-600) 200
To Cash A/c (paid by H.O.) Furniture (3,000×90%) 2,700
Rent 1,800 Stock 28,000
Salary 3,200 Debtor 16,880
Stationary and printing 800 By OSR (30000×20%) 6,000
By Goods sent to Branch
To CSR (28000×20%) 5,600 (1,60,000×20%) 32,000
To Goods sent to Branch 400
(2000×20%)
To N.P. 24,180
2,20,780 2,20,780
Working Note 1. Memorandum Debtor A/c
To b/d 18,000 By Bank. 60,000
To Credit Sales 60,000 By Discount 160
By Sales return 960
By C/d 16880
78,000 78,000
Problem. 24
A Bombay firm whose accounting year ends on 31st December has two branches-one at Allahabad and the other
at Varanasi. The branches keep a complete set of books on 31st December, 1986 the Allahabad and Varanasi
Branch Accounts in the Bombay books showed debit balances of ` 30,450 and ` 45,000 Respectively before
taking the following information into account:
(a) Goods valued ` 2,000 were transferred from Allahabad to Varanasi under instructions from Head Office.
(b) The Allahabad Branch collected ` 2,500 from an Allahabad customer of the Head office.
(c) The Varanasi Branch paid ` 5,000 for certain goods purchased by the Head Office in Varanasi.
(d) ` 5,000 remitted by the Allahabad Branch on 29th December, 1986, was received on 3rd January following.
(e) The Varanasi Branch received on behalf of the Head Office ` 1,500 as dividend from a Varanasi Company.
Pass journal entries in the Head Office books and then write up the two Branch Accounts therein.
Solution In the books of the Head Office

Journal
Date Particulars Dr. ` Cr. `
1993 (i) Varanasi Branch A/c. Dr. 2,000
Dec. 31 To Allahabad Branch A/c. 2,000
(Being goods transferred from Allahabad branch to
Varanasi branch under head office instruction)
(ii) Allahabad Branch A/c. Dr. 2,500

To Sundry Debtors A/c. 2,500
(Being cash collected by Allahabad branch from head office
debtors at Allahabad)
(iii) Purchases A/c. Dr. 5,000

To Varanasi Branch A/c. 5,000
(Being the amount paid by Varanasi branch in respect of
purchases of head office)
(iv) Cash-in-Transit A/c. Dr. 5,000

To Allahabad Branch A/c. 5,000
(Being cash remitted by Allahabad branch on 29th
December 1993 received by the head office on 3rd Jan. 1994)
(v) Varanasi Branch A/c. Dr. 1,500

To Dividend received A/c. 1,500
Dr. Allahabad Branch Account Cr.
Date Particulars ` Date Particulars `
31.12.1993 To Balance b/d 30,450 31.12.1993 By Varanasi Branch A/c 2,000
To Sundry Debtors A/c. 2,500 By Cash in Transit A/c 5,000
32,950 32,950
Cr. Varanasi Branch Account Cr.
Date Particulars ` Date Particulars `
31.12.93 To Balance b/d 45,000 31.12.93 By Purchases A/c 5,000
To Allahabad Branch A/c 2,000 By Balance c/d 43,500
To Dividend 1,500
48,500 48,500
Problem. 25
Head office passes adjustment entry at the end of each month to adjust the position arising of inter-branch
transactions during the month. From the following inter-branch transactions in January 1996, make the entry in
the books of Head Office;
(a) Bombay Branch :
1. Received Goods ` 6,000 from Calcutta branch, ` 4,000 from Patna branch.
2. Sent Goods to : ` 10,000 to Patna, ` 8,000 to Calcutta.
3. Received B/R ` 6,000 from Patna
4. Sent Acceptance : ` 4,000 to Calcutta, ` 2,000 to Patna
(b) Madras Branch (Apart from above)
1. Received Goods ` 10,000 from Calcutta. ` 4,000 from Bombay
2. Cash sent ` 2,000 to Calcutta ` 6,000 to Bombay.

(c) Calcutta Branch (Apart from the above);
1. Sent Goods to Patna : ` 6,000
2. Paid B/P : ` 4,000 to Patna. ` 4,000 cash to Patna.
Solution Statement of inter branch transfer
Particulars Bombay Calcutta Patna Madras

Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Received goods 10,000 6,000 4,000
Sent goods 18,000 8,000 10,000
Received B/R 6,000 6,000
Sent acceptance 6,000 4,000 2,000
Received goods 4,000 10,000 14,000
Cash sent 6,000 2,000 8,000
Goods sent 6,000 6,000
B/P given and cash 8,000 8,000
Total 22,000 28,000 14,000 30,000 26,000 10,000 14,000 8,000
Difference 6,000 cr. 16,000 16,000 6,000
cr. cr. cr.
Adjustment entry at the end of month:

Patna branch a/c……… Dr. 16,000
Madras branch a/c……… Dr. 6,000
To Bombay branch a/c 6,000
To Calcutta branch a/c 16,000
Problem. 26
Show adjustment Journal entry in the books of Head Office at the end of April, 2003 for incorporation of inter-
branch transactions assuming that only Head Office maintains different branch accounts in its books.
a. Delhi Branch:
(1) Received goods from Mumbai – ` 35,000 and ` 15,000 from Kolkata.
(2) Sent goods to Chennai – ` 25,000, Kolkata – ` 20,000.
(3) Bill Receivable received – ` 20,000 from Chennai
(4) Acceptances sent to – Mumbai – ` 25,000, Kolkata – ` 10,000
b. Mumbai Branch (part from the above):
(5) Received goods from Kolkata - ` 15,000, Delhi 20,000
(6) Cash sent to Delhi – ` 15,000, Kolkata – ` 7,000.
c. Chennai Branch (part from the above).
(7) Received goods from Kolkata – ` 30,000
(8) Acceptances and Cash sent to Kolkata – ` 20,000 and ` 10,000, respectively.
d. Kolkata Branch (apart from the above) :
(9) Sent goods to Chennai – ` 35,000.
(10) Paid cash to Chennai – ` 15,000.
(11) Acceptances sent to Chennai – ` 15,000.
All working should form part of the answer.
Solution
Adjustment Table
Delhi Br. Mumbai Kolkata Chennai

Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
50,000 – – 35,000 – 15,000 – –
– 45,000 – – 20,000 – 25,000 –
20,000 – – – – – – 20,000
– 35,000 25,000 – 10,000 – – –
– 20,000 35,000 – – 15,000 – –
15,000 – – 22,000 7,000 – – –
– – – – – 33,000 30,000 –
– – – – 30,000 – – 30,000
– – – – – 35,000 35,000 –
– – – - – 15,000 15,000
15,000 – – 3,000 58,000 15,000 15,000 70,000
10,000 10,000 60,000 60,000 1,10,000 1,05,000
Adjustment entry in the books of H.O.
Mumbai Br. Dr. 3,000
Chennai Br. Dr. 70,000
To Delhi Br. A/c 15,000
To Kolkata Br. A/c 58,000
Problem. 27
On 1st April, 2001, a head office purchased a plant costing ` 66,000 for the branch. On 1st Jan, 2002, the branch
purchased furniture for ` 10,000. The rate of depreciation on plant is 33-1/3% p.a. and on furniture 10% p.a.
The accounting year of the head office and branch is the financial year. Give the necessary journal entries in the
books of H.O. and Branch if fixed assets accounts are maintained (a) at Head Office (b) at Branch.
Solution
(a) If Fixed Assets Accounts are maintained at H.O.
(i) Journal of Head Office
Date Particulars Dr. (`) Cr. (`)
01.04.2001 Branch Plant A/c Dr. 66,000
To Cash A/c 66,000
(Being the Plant purchased for Branch)
01.01.2002 Branch Furniture A/c Dr. 10,000
To Branch A/c 10,000
(Being the Furniture purchased by Branch)
31.03.2002 Branch A/c Dr. 22,250
To Branch Plant A/c 22,000
To Branch Furniture A/c 250
(Being the depreciation provided)
(ii) Journal of Branch
Date Particulars Dr. (`) Cr. (` )
01.04.2001 No Entry
01.01.2002 Head Office A/c Dr. 10,000
To Cash A/c 10,000
(Being Furniture purchased)
31.03.2002 Depreciation A/c Dr. 22,250
To H.O. A/c 22,250

(b) If Fixed Assets Accounts are maintained at Branch
(i) Journal of Head Office

Date Particulars' Dr. (`) Cr. (` )
01.04.2001 Branch A/c 66,000
To Cash A/c Dr. 66,000
(Being Plant purchased for Branch)
01.08.2002 No Entry
31.03.2002 No Entry
(ii) Journal of Branch
Date Particulars Dr. (`) Cr. (` )

01.04.2001 Plant A/c Dr. 66,000
To H.O. A/c 66,000
(Being Plant purchased by H.O.)
01.01.2002 Furniture A/c Dr. 10,000
To Cash A/c 10,000
(Being Furniture Purchased)
01.03.2002 Depreciation A/c Dr. 22,250
To Plant A/c 22,000
To Furniture A/c 250
Problem. 28
Alphs & Co., having head office in Mumbai has a branch in Nagpur. The branch at Nagpur is an independent
branch maintaining separate books of account. On 31.3.2007, it was found that the goods dispatched by head
office for ` 2,00,000 was received by the branch only to the extent of ` 1,50,000. The balance goods are in
transit. What is the accounting entry to be passed by the branch for recording the goods in transit, in its books?
[May – 2007]
Solution
Nagpur branch must include the inventory in its books as goods in transit.
The following journal entry must be passed by the branch:
Goods in Transit A/c Dr. 50,000
(Being Goods sent by Head Office is still in transit on the closing date)
Problem. 29
Goods worth ` 50,000 sent by head office but the branch has received till the closing date goods worth `
40,000. Give journal entry in the books of H.O. and branch for goods in transit.
[Nov – 2008]
Solution Goods in transit = Goods sent by HO
= Goods received by Branch
= 50,000 – 40,000
= ` 10,000
The following journal entries may be passed:

In the books of H.O.
Particulars ` `
Goods in Transit A/c Dr. 10,000 10,000
To Branch
(Being goods sent by HO still in transit)
Goods in Transit A/c Dr. 10,000
To H.O. A/c 10,000
(Being Goods sent by Head Office is still in transit on the closing date)
Problem. 30
Global Limited has a branch which closes its books of account every year on 31 st March. This is an
independent branch which maintains comprehensive books of account for recording their transactions.
You are required to show journal entries in the books of branch on 31st March. 2011 to rectify or adjust the
following:
(i) Head Office allocates ` 1,35,000 to the branch as head office expenses, which have not yet been
recorded by branch.
(ii) Depreciation of branch fixed assets, whose accounts are kept by head office in its books, not yet
recorded in the branch books, ` 1,15,000
(iii) Branch paid ` 1,40,000 as salary to an official from head office on visit to branch and debited the
amount to its Salaries Account.
(iv) Head Office collected ` 1,30,000 directly from a branch customer on behalf of the branch, but no
intimation was received earlier by the branch. Now the branch learns about it.
(v) It is learnt that a remittance of ` 1,50,000 sent by the branch has not been received by head office till
date. [Nov.-2011]
Solution In the books of Branch
Journal Entries
Date Particular’s Dr.(`) Cr. (` )
(i) Head Office Expenses Dr. 1,35,000
To Global Limited (H.O.) A/c 1,35,000
(Being expenses allocated to branch by head office)
(ii) Depreciation A/c Dr. 1,15,000
To Global Limited (H.O.) A/c 1,15,000
(Being depreciation on fixed assets of branch, whose account are
maintained by head office)
(iii) Global Limited (H.O.) A/c Dr. 1,40,000
To Salaries A/c 1,40,000
(Being the rectification of salary paid, on behalf of the head office)
(iv) Global Limited (H.O.) A/c Dr. 1,30,000
To Debtors A/c 1,30,000
(Being adjustment of direct collection from branch debtors, by head
office)
(v) No. entry shall be passed in the books of Branch but will be shown in the books of Head Office as cash-
in-transit.
Cash in transit A/c Dr. 1,50,000
To H.O. A/c 1,50,000
Problem. 31
Give Journal Entries in the books of Head Office to rectify or adjust the following:
(i) Goods sent to Branch ` 12,000 stolen during transit. Branch manager refused to accept any liability.
(ii) Branch paid ` 15,000 as salary to the officer of Head Office on his visit to the breach.
(iii) On 28th March, 2012, the H.O. dispatched good to the Branch invoiced at ` 25,000 which was not
received by Branch till 31st March, 2012.
(iii) A remittance of ` 10,000 sent by the branch on 30th March, 2012, received by the Head Officer on 1st
April, 2012.
(iv) Head Office made payment of ` 25,000 for purchase of goods by Branch and wrongly debited its own
purchase account. [Nov-2012] 5 Marks
Solution Journal in the books of H.O.

Particulars Dr. Cr.
(i) Loss in transit A/c Dr. 12,000
(being Goods Stolen in transit)
(ii) Salaries A/c Dr. 15,000
(Being Salary paid by Branch)
(iii) Goods – in- transit A/c Dr. 25,000
(Being Goods Sent to Branch is in transit)
(iv) Cash in transit A/c Dr. 10,000
(Remittance by Branch is in transit)
(v) Branch A/c Dr. 25,000
To purchase A/c 25,000
(being entry rectified)
Problem. 32
Sri Sundram commenced business on 1st April 1992 with head office at Madras and a branch at Nagpur.
Purchases were made exclusively by the head office when the goods were processed before sale. The was no
loss or wastage’s in processing. Only the processed goods received from head office were handled by the
branch and these were charged there to at processed cost plus 10%.
All sales whether by head office or by the branch were at a uniform gross profit of 25% on cost. Following is
the Trial balance of Sri Sundram as on 31st March 1993.
Head Office Dr. Cr.
Particulars ` `
Capital 62,000
Drawings 11,000
Purchases 3,93,900
Cost of processing 10,100
Sales 2,56,000
Goods sent to branch 1,84,800
Administrative expenses 27,800
Selling expenses 10,000
Debtors 61,920
Creditors 1,20,280
Branch current account 77,960
Bank balance 30,400
6,23,080 6,23,080
Branch
Particulars Dr. Cr.
Sales 1,64,000
Goods received from Head office 1,76,000
Administrative expenses 3,000
Selling expenses 1,240
Debtors 22,720
Creditors 2,160
H.O. Current accounts 52,300
Bank balance 15,500
2,18,460 2,18,460
The following further information are also available:

(i) Goods sent by head office to the branch in March, 1993 art ` 8,800 were not received by the branch until
April 1993.
(ii) A remittance of ` 16,860 from the branch to head office was not received unit April 1993.
(iii) Stock taking at the branch disclosed a shortage of goods of ` 4,000 (at selling price)
(iv) Cost of unprocessed goods at head office on 31st March, 1993 was ` 20,000
Prepare Trading and profit and loss Account in Columnar form and balance sheet of the business as a whole as
on 31st March 1993.
Solution Trading and P/L A/c on 31.3.1993
Particulars H.O Branch Particulars H.O Branch

To Purchase 3,93,900 By sales 2,56,000 1,64,000
To Cost of processing 10,100 By GSTB A/c 1,84,800
To GRF H.O 1,76,000 By Shortage (4000 × 110/125) 3,520
To G. Profit 68,000 19,680 By closing Stock
(164000 × 15/125) Unprocessed Goods 20,000
Processed Goods 11,200 28,160
4,72,000 1,95,680 4,72,000 1,95,680
By Adm. Exp. 27,800 3,000 By G.P 68,000 19,680
By Opening stock reserve - -
By S. Exp. 10,000 1,240
By Shortage 3,520
By Stock res. 3,360 --
[(28,160+8,800)×10/100]
By Net Profit 26,840 11,920
68,000 19,680 68,000 19,680
W/N-
G.P. Of H.O.-
To customer 256000× 25/125 = 51200
To branch 184800 × 10/110 = 16800
68,000
W.N.1 Closing Stock
Particulars H.O Branch
Purchase 3,93,900
Goods sent/received (1,68,000) 1,76,000
(-) Cost of sales (2,04,800) 1,44,320
(-) In of Goods Shortage 3,520
C. Stock 21,100 28,160
+ Cost of prov. 10,100

Total Stock 31,200
Unproduced 20,000
Produced 11,200
Balance Sheet
On 31-3-93
Particulars Particulars
Capital 62,000 Stock
(+) Profit 38,760 H.O 31,200
(-) Drawing (11,000) 89,760 Branch 28,160
Creditors In transit 8,800
H.O 1,20,280 (-) Stock Res. (3,360) 64,800
Branch 2,160 1,22,440 Debtors
H.O 61,920
Branch 22,720 84,640
Bank Balance
H.O 30,400
Branch 15,500 45,900
Cash in transit 16,860
2,12,200 2,12,200
Balance sheet
Particulars H.O. Branch Particulars H.O. Branch

Capital 62,000 Debtor 61,920 22,720
H.O. Current A/c Bank 15,500
(capital a/c of branch) 52,300 Closing stock
P/L a/c 26,840 11,920 Unprocessed 20,000
Drawing (11,000) Processed 11,200 28,160
Creditor 1,20,280 2,160 In transit 8,800
Closing stock reserve 3,360 Cash in transit 16,860
Branch a/c 52,300
2,01,480 66,380 2,01,480 66,380
In the books of H.O.
Stock in transit a/c………………….Dr. 8800
Cash in hand a/c…………………..Dr. 16860
To Branch a/c 25660
Gross profit at branch = 164000×15/125 = 19680
Problem. 33
Stainless Ltd. operates from a head office in Indore and a branch at Churu, where separate books are kept. The
company makes up its accounts to December 31, in each year.
Goods sent to the branch by head office are charged at cost plus 10%. Other than the sales to branch, head
office sales are made at a uniform gross profit of 25% on selling price. Churu sales are all made at a uniform
gross profit to the branch of 20% on selling price.
You are given the following relevant information regarding the year ended December 31,1994
Indore ` Churu `
(1) Expenses paid during the year :
Salary 6,415 2,418
Selling expenses 4,220 1,610
Overhead expenses 2,991 2,021

(2) Overhead expenses accrued.
December 31, 1993 249 156
December 31, 1994 416 82
(3) Purchases at head office totalled ` 97,680 and sales, including ` 44,000 invoiced to Churu branch, were `
1,19,000.
(4) In addition to goods received from head office the Churu branch has purchased goods from outside
suppliers amounting to ` 9,200. On December, 31, 1994, there were goods-in-transit from head office at an
invoice price of ` 3,400 which were not received by the branch until January 3, 1995.
(5) Sales at Churu were ` 60,000 and discounts allowed to customers during the year amounted to ` 910.
(6) The stocks on hand on December 31, 1993, had been ` 17,250 at Indore and ` 7,500 at Churu, being cost to
the branch. The stock at Churu included stock invoiced by head office at ` 5,600. On December, 31,1994
the stock at Churu contained stock invoiced by head office amounting to ` 7,700.
You are required to prepare, in columnar form, the head office, branch and combined trading and profit and loss
accounts for the year ended December 31' 1994.
Solution Trading and Profit and Loss A/c

for the year ended 31 st December 1994
Particulars H.O. Churu Particulars H.O. Churu
` ` ` `
To Opening stock 17,250 7,500 By Sales to customer 75,000 60,000
To Purchases 97,680 9,200 By Goods sent to Branch 44,000 –
To Goods from H.O. – 40,600 By Closing Stock (b/f) 18,680 9,300
To Gross Profit c/d 22,750 12,000 _______ _________
1,37,680 1,37,680 1,37,680 1,37,680
To Salary 6,415 2,418 By Gross Profit b/d 22,750 12,000
To Selling Exp. 4,220 1,610 By Provision for unrealised 509 –
To Overhead Exp. 3,158 1,947 Profit in opening stock
To Discount – 910
To Provision for
unrealised profit in 1,009 –
closing stock
To Net Profit 8,457 5,115
23,259 12,000 23,259 12,00
10/110
H.O. Branch I.P. = 110
Cost =100
110 × 25% = 27.5
Customer = 137.5
33.33%
133.33%
Working Note
G.P. = Sales ×G.P. Ratio

(i) At branch = 60000×20% = 12,000
(ii) At H.O.:
To branch = 44,000 × 10/110 = 4,000
To customer = 75 000×25% = 18,750
22,750
Note: S.R. will be calculated only on closing stock at branch which has come from H.O. not on outside
purchase.
OSR = 5600 × 10/110 = 509
CSR = 7700 × 10/110 = 700
(+) 3400 × 10/110 = 309
(in transit) 1009
Working Note
OH paid 2,991 2,021
(+) o/s at end 416 82
(-) o/s at beginning (249) (156)
OH Incurred 3,158 1,947
Problem. 34
X, Y and co. commenced business on 1.1.1987 with Head office at Calcutta and a Branch at Trichur. All gooks
were purchased by Head Office and normally packed immediately but on 31.12.1987, goods costing ` 5,000
remained unpacked. Only packed goods were sent to the Branch which was charged at selling price less 10%
Following information is furnished to you as on 31st Dec. 1987 from Head Office and Branch Office books.
Particulars H. O. Branch
Capital Account 40,000 —
Drawing by proprietor 10,000 —
Purchases 4,00,000 —
Packing materials bought 6,000 —
Sales 3,20,000 1,00,000
Dispatch of goods to Branch 1,13,400 —
Selling expenses 16,000 800
Clerk’s salary, wages, etc. 20,000 3,000
Sundry Debtors 28,000 4,200
Sundry Creditors 26,600 5,000
Current Accounts:
Head Office (credit balance ) 12,000
Branch Office ( Debit balance ) 19000
Bank Balances 1,000 1,000
Goods received from Head Office — 1,08,000
You are further informed that:
(a) Sales by Head Office were at a uniform gross profit, after charging packing materials of 20% on selling
price.
(b) Sales at Branch were at fixed selling price.
(c) Goods invoiced and dispatched by Head Office to Branch in December, 1987 for ` 5,400 were received in
the Branch only on 10th January, 1988.
(d) Stock of packing materials on hand as on 31st December, 1987 was valued at `1,000.
(e) Remittance of ` 1,600 the Branch to Head office was in transit on 31.12.87
(f) ` 2,000 worth of stock at selling price was damaged at the Branch. For valuing Stock, this was reduced by `
1,090 below the invoice cost to the Branch. It was decided that the Head office and the branch would share
equally this loss including the shortage of the Branch of goods at selling price of ` 500.
Prepare the Profit and Loss Account of the Trichur and Calicut Offices and also a Balance Sheet as at
31.12.1987.
Solution XV & Co.

Dr. Profit & Loss Account for the year ended 31st December, 1993 Cr.
Particul ars Head Office Branch Particul ars Head Office
Branch
To Purchases 4,00,000 — By Sales 3,20,000 1,00,000
To Goods received fro m HO — 1,13,400 By Goods Sent to Branch 1,13,400 —
To Packing Materials consumed 5,000 — By Branch Shortage in Stock — 450
To Gross Profit c/d (Note: 3 & 4) 76,600 10,000 By Damaged Goods — 1.090
By Closing Stock
Damaged goods 710
Unpacked goods 5,000 —
Packed goods (B.f.) 43,200 15,750
4,81,600 1,23,400 4,81,600 1,23,400
To Selling expenses 16,000 800 By Gross Profit b/d 76,600 10,000
To Salaries & wages 20,000 3,000
To Damaged Goods (1 : 1) 545 545
To Shortage in Stock (1 : 1) 225 225
To Stock Reserve 2,350 —
To Net Pro fit 37,480 5,430
(trSolution to Capital)
76,600 10,000 76,600 10,000
Balance Sheet

Capital 40,000 Debtors 28,000 4,200
Less: Drawing (10,000) Branch A/c 11,230
30,000 Bank 1,000 1,000
H.O A/c 11230 Cash-in-transit 1,600
P/L A/c 37,480 5430 Closing Stock
Creditors 26,600 5000 Packing Material 1,000
C.S.R 2,350 Unpacking material 5,000
Packed Material 43,200 15,750
Damaged Goods 710
Stock-in-transit 5,400
96,430 21,660 96,450 21,660
Branch A/c

To B/d 19,000 By Goods-in-transit 5,400
By Cash-in-transit 1,600
By Abnormal loss & shortage 770
By C/d 11,250
19,000 19,000
H.O A/c

To Abnormal Loss & Shortage 770 By B/d 12,000
To C/d 11,230
12,000 12,000
Balance Sheet of XY & Co
Liabilities Amount Assets Amount

Capital 40,000 Debtors: H.O 2,800
Less: Drawing 10,000 Branch 4,200 32,200
30,000 Bank 2,000
P/L A/c 42,910 Cash-in-transit 1,600
Creditor 31,600 Stock
CSR 2,350 PM 1,000
Unpacked material 5,000
Packing Material 58,950
Damaged Goods 710
In-transit 5,400
1,06,860 1,06,860
Working Notes
(1) Let the selling price be 100
Less Profit 20% 20
Cost Price 80
(2) Selling price 100

Less 10 % of selling price 10
Invoice price 90
(3) G.P. of Branch = 1,00,000  10/100 = 10,000

(4) G.P. of H.P. = 1,13,400  10/90 = 12,600
= 3,20,000  20/100 = 64,000
76,600
(5) Stock reserve is to be created @ 10/90 on ` 15,750 = ` 1.750.
Loading on goods-in-transit is 10/90 × ` 5,400 = ` 600.
Total loading is `1,750 + ` 600 = ` 2,350.
Change working note 5 & balance sheet (excluding S.R portion)
(i) S.P to branch 2000

G.P of branch (10/100) 200
Invoice price to branch 1800
Valued at NRV 710
Reduced by 1090
H.O Branch
(545) (225)
ii) Shortage of Branch at S.P 500

Invoice price to Branch (90%) 450
H.O Branch
(225) (225)
Problem. 35
M/s Shah & Co. commenced business on 1.4.2012 with Head Office at Mumbai and a Branch at Chennai.
Purchases were made exclusively by the head office, where the goods were processed before sale. There was no
loss or wastage in processing.
Only the processed goods received from Head Office were handled by the Branch.
The goods were sent to branch at processed cost plus 10%.
All sales, whether by Head Office or by the Branch, were at uniform gross profit of 25% on their respective
cost.
Following is the Trail Balance as on 31.3.2013.
Head Office Branch
Dr. Cr. Dr. Cr.
` ` ` `
Capital 3,10,000
Drawings 55,000
Purchases 19,69,500
Cost of processing 50,500
Sales 12,80,000 8,20,000
Goods sent to Branch 9,24,000
Administrative expenses 1,39,000 15,000
Selling expenses 50,000 6,200
Debtors 3,09,600 1,13,600
Branch Current A/c 3,89,600
Creditors 6,01,400 10,800
Bank Balance 1,52,000 77,500
Head Office Current account 2,61,500
Goods received from H.O. 8,80,000
31,15,400 31,15,400 10,92,300 10,92,300
Following further information is provided:
(i) Goods sent by Head Office to the Branch in March, 2013 of ` 44,000 were not received by the Branch
till 2.4.2013.
(ii) A remittance of ` 84,300 sent by the Branch to Head Office was also similarly not received upto
31.3.2013.
(iii) Stock taking at the Branch disclosed a shortage of ` 20,000 (at selling price to the branch).
(iv) Cost of unprocessed goods at Head Office on 31.3.2013 was ` 1,00,000.
Prepare Trading and Profit and Loss account in columnar form and Balance Sheet of the Business as a
whole as at 31.3.2013. [Nov. 2005]
Solution Trading and Profit and Loss Account for the year ended 31 st March, 2013
Particulars H.O. Branch Particulars H. O. Branch
` ` ` `
To Opening stock Nil Nil By Sales 12,80,000 8,20,000
To Purchase 19,69,500 - By Goods sent to BR 9,24,000 -
To Cost of processing 50,500 - By Abnormal shortage
To Good received from 110
H. O. - 8,80,000 20,000  - 16,000
137.5
To Gross Profit c/d 3,40,000 1,64,000 By Closing Stock:
Unprocessed goods
1,00,000 -
Processed goods (b/f)
56,000 2,08,000
23,60,000 10,44,000 23,60,000 10,44,000
To Admn. Exp. 1,39,000 15,000 By Gross profit 3,40,000 1,64,000
To Selling Exp. 50,000 6,200 By O.S.R. Nil
To Abnormal Shortage - 16,000
To C.S.R. 10 22,909 -
2,08,000  110
44,000
To Net Profit 1,28,091 1,26,800

3,40,000 1,64,000 3,40,000 1,64,000
Working Note:
27.5
G.P. at Branch = 8,20,000   1,64,000
137.5
At H.O.
25
 Direct 12,80,000   2,56,000
125
10
 Branch 9,24,000   84,000
110
3,40,000
Balance sheet as at 31 st March, 2005

Liabilities ` Assets `
Capital 3,10,000 Debtors
Add: Net Profit 2,54,891 H. O. 3,09,600
5,64,891 Branch 1,13,600 4,23,200
Less: Drawings 55,000 5,09,891 Closing Stock
Creditors Processed Goods
H. O. 6,01,400 H. O. 56,000
Branch 10,800 6,12,200 Branch 2,08,000
2,64,000
Less: Stock Reserve 18,909 2,45,091
Unprocessed goods 1,00,000
Bank Balance
H.O. 1,52,000
Branch 77,500 2,29,500
Goods in transit 44,000
Less: Stock reserve 4,000 40,000
Cash in transit 84,300
11,22,091 11,22,091
Working Notes
(i) Stock at Head Office:
Cost of goods processed ` (19,69,500 + 50,000 – 1,00,000) 19,20,000
Less: Cost of goods sent to Branch (` 9,24,000 × 100/10) 8,40,000
Cost of goods sold (` 12,80,000 × 100/125) 10,24,000 18,64,000
Stock of processed goods with H. O. 56,000
(ii) Stock at Branch: `
Goods received from H. O. (at invoice price) 8,80,000
Less: Invoice value of goods sold ` 8,20,000 × 100/125) 6,56,000
Invoice value of stock shortage (` 20,000 × 100/125) 16,000 6,72,000
Stock at Branch at invoice price 2,08,000
Less: Stock Reserve (2,08,000 × 10/110) 18,909
Stock of processed goods with Branch (at cost) 1,89,091
(i) Stock Reserve
Unrealised profit on Branch Stock (` 2,08,000 × 10/110) 18,909
Unrealised profit on goods in transit (` 44,000 × 10/110) 4,000
22,909
Problem. 36
A Limited Company has its Head Office in Delhi and a Branch in Bombay where a separate set of books is
used. The following are the vital balances extracted on 31st December, 2012:
Head Office Trial Balance
Particulars ` `
Share Capital (Authorised: 10,000 Equity Shares of ` 100 each)
Issued: 8,000 Equity Shares 8,00,000
Profit and Loss Account 1.1.12 25,310
Interim Dividend paid- August 2012 30,000
General Reserve 1,00,000
Fixed Assets 5,30,000
Stock 2,22,470
Debtors and Creditors 50,500 21,900
Profit for 2012 82,200
Cash Balance 62,730
Branch Current Account 133,710
10,29,410 10,29,410
Branch Trial Balance
Particulars ` `
Fixed Assets 95,000
Profit for 2012 31,700
Stock 50,460
Debtors and Creditors 19,100 10,400
Cash Balance 6,550
Head Office Current Account 1,29,010
1,71,110 1,71,110
The difference between the balances of the Current Accounts in the two sets of books is accounted for as
follows:
(a) Cash remitted by the Branch on 31st Dec., 2012, but received by the H.O. on 1st Jan. 2013: ` 3000.
(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 any liability -`1,700.
Give the Branch Current Account in the Head Office books after incorporating Branch Trial Balance through
Journal. Also prepare the company’s Balance Sheet on 31st December, 2012.
Solution Journal Entry
Particulars Dr. Cr.

Cash in transit a/c…………Dr. 3,000
Loss in transit a/c………….Dr. 1,700
To Branch A/c 4700
Branch F.A. A/c…………….Dr. 95,000
Branch stock a/c……………Dr. 50,460
Branch Debtor a/c………….Dr. 19,100
Branch cash a/c…………….Dr. 6,550
To Branch A/c 1,71,110
Branch a/c………………….Dr. 10,400
To Branch creditor A/c 10,400
Branch a/c…………………Dr. 31,700
To General P/L A/c 31,700
Dr. Branch Current Account Cr.

To Balance b/d 1,33,710 By Cash-in-transit 3,000
To General P/L a/c (b/f) 31,700 By Loss of theft 1,700
To Branch Creditors 10,400 By Branch Assets 1,71,110
1,75,810 1,75,810
Dr. General Profit and Loss Account for 2012 Cr.
To Loss by Theft 1,700 By Balance b/d 25,310
To Interim Dividend for 1994 30,000 By Year's Profit:
To Balance c/d (carrying forward to B/S) 1,07,510 H.O. 82,200
Branch 31,700 1,13,900
1,39,210 1,39,210
Balance Sheet of the Company as on 31 st Dec. 2012
Equity & Liab. `
1. Shareholders Fund:
Equity share capital (8,000 × 100) 8,00,000
P/L A/c 1,07,510
General Reserve 1,00,000 1,07,510
2. Non-Current Liability Nil
3. Current Liability
Creditor 32,300
10,39,810
Assets `
1. Non-Current Assets:
2. Current Assets
 Stock 2,72,930
 Debtors 69,600
 Cash 69,280
 Cash in transit 3,000 4,14,810
10,39,810
Problem. 37
The following is the trial balance of Delhi Branch as at 31 st March, 2002.
Particulars Dr. (`) Cr. (` )
H.O. Account 32,400
Stock on 1st April 2001 60,000
Purchases 1,78,000
Goods received from H.O. 90,000
Sales 3,80,000
Goods supplied to H.O. 60,000
Salaries 15,000
Debtors 37,000
Creditors 18,500
Rent 9,600
Office expenses 4,700
Cash in hand and at bank 17,800
Furniture 14,000
4,58,500 4,58,500
Information:
(a) Stock on hand was valued at ` 27,000,
(b) The Branch account in the Head office books on 31st March, 2002 stood at ` 4,600 (Debit balance).
(c) On 27th March, the Head Office forwarded goods to the value of ` 25,000 to the: branch where they were
received on 3rd April,
Required: Give Journal entries necessary of incorporation and prepare Delhi Branch Trading and Profit and
Loss A/c and the Delhi Branch A/c in the Books of H.O.
Solution Journal of H.O.
Particulars Dr. (`) Cr. (` )

Goods-in-transit A/c Dr. 25,000
To Delhi Branch A/c 25,000
(Being adjustment of goods-in-transit)
Cash-in-transit A/c Dr. 12,000

(Being adjustment of remittances-in-transit)
Delhi Branch Trading A/c Dr. 3,28,000

To Delhi Branch A/c 3,28,000
[Stock ` 60,000 + Purchases ` 1, 78,000
+ Goods received from H.O, ` 90,000]
(Being incorporation of debit items of trading account)
Delhi Branch A/c Dr. 4,67,000

To Delhi Branch Trading A/c 4,67,000
[Sales ` 3,80,000 + Goods supplied to H.O.
` 60,000 + Closing stock ` 27,000]
(Being incorporation of credit items of trading account)
Delhi Branch Trading A/c Dr. 1,39,000
To Delhi Profit & Loss A/c 1,39,000
(Being transfer of gross Profit to Profit and Loss A/c)
Delhi Branch Profit and Loss A/c Dr. 29,300

[Salaries ` 15,000 + Rent ` 9,600 + Office expenses ` 4,700]
(Being debit items of branch profit and loss account incorporated)
Delhi Branch Profit and Loss A/c Dr. 1,09,700

To General Profit and Loss A/c 1,09,700
(Being transfer of branch profit to general Profit and Loss Account)
Delhi Branch Debtors A/c Dr. 37,000

Delhi Branch Cash A/c Dr. 17,800
Delhi Branch Furniture A/c Dr. 14,000
Delhi Branch Stock A/c Dr. 27,000
(Being incorporation of branch assets)
Delhi Branch A/c Dr. 18,500

To Delhi Branch Creditors A/c 18,500
(Being incorporation of branch creditors)
Dr. Delhi Branch Account Cr.

To Balance b/d, 4,600 By Goods-in-transit 25,000
To Balance Trading Account 4,67,000 By Cash-in-transit 12,000
To Branch liabilities 18,500 By Branch Trading A/c 3,28,000
By Branch Profit and Loss A/c 29,300
By Branch Assets A/c 95,800
4,90,100 4,90,100
Delhi Branch Trading and Profit and Loss Account
Dr. for the year ended 31 st March, 2002 Cr.
To Branch Account: By Branch Account:
Stock 60,000 Sales 3,80,000
Purchases l,78,000 Goods supplied to H.O. 60,000
Goods from H.O. 90,000 3,28,000 Closing stock 27,000 4,67,000
To G.P 1,39,000 ______
4,67,000 4,67,000
To Branch A/c By G.P. 1,39,000
Salaries 15,000
Rent 9,600
Office expenses 4,700 29,300
To General P & L A/c (Net Profit) 1,09,700
1,39,000 1,39,000
H.O. A/c (Dr.) 32,400

Branch A/c (Dr. balance) 4,600
Difference 37,000
Out of 37000:
Stock in transit = 25,000
Cash in transit = 12,000 (balancing figure assumption)
Problem. 38
AFFIX of Kolkata has a branch at Delhi to which the goods are supplied from Kolkata but the cost thereof is
not recorded in the Head Office books. On 31st March, 2012 the Branch Balance was as follows:
Creditors Balance 40,000 Debtors Balance 2,00,000
Head Office 1,68,000 Building Extension A/c closed by
transfer to H.O. A/c -
Cash at Bank 8,000
2,08,000 2,08,000
During the six months ending on 30-9-2012, the following transactions took place at Delhi.
` Assets `
Sales 2,40,000 Manager’s Salary 4,800
Purchases 48,000 Collections from Debtors 1,60,000
Wages paid 20,000 Discounts allowed 8,000
Salaries (inclusive of advance of ` Discount earned 1,200
2,000) 6,400 Cash paid to Creditors 60,000
General Expenses 1,600 Building Account (further payment) 4,000
Fire insurance (paid for one year) 3,200 Cash in hand 1,600
Remittance to H.O. 38,400 Cash at Bank 28,000
2,08,000 2,08,000
Set out the Head office Account in Delhi books and the Branch Balance Sheet as on 30-9-2012. Also give
journal entries in the Delhi books. [S.M., Page – 8.45, Illus.5]
Problem. 39
On 31 st March, 2013 Kanpur Branch submits the following Trial Balances to its Head Office at Lucknow:
Debit Balance ` in lacs
Furniture and Equipment 18
Depreciation of Furniture 2
Salaries 25
Rent 10
Advertising 6
Telephone, Postage and Stationery 3
Sundry Office Expenses 1
Stock on 1st April, 2012 60
Goods Received from Head Office 288
Debtors 20
Cash at Bank and in hand 8
Carriage Inwards 7
448
Credit Balances
Outstanding Expenses 3
Goods Returned to Head Office 5
Sales 360
Head Office 80
448
Additional Information:
Stock on 31st March, 2013 was valued at ` 62 lacs on 29th March, 2013 the Head Office dispatched goods
costing ` 10 lacs to its branch. Branch did not receive these goods before 1st April, 2013. Hence the figure of
goods received from Head office does not include these goods.
Also the head office has charged the branch ` 1 lacs for centralised services for which the branch has not passed
the entry.
You are required to:
(a) Pass Journal Entries in the books of the Branch to make the necessary adjustments.
(b) Prepare Final Accounts of the Branch including Balance Sheet, and
(c) Pass Journal Entries in the books of the Head Office to incorporate the whole of the Branch Trial
Balance. [P.M., Page No.-8.6 Q.5]
Solution Books of Branch

Journal Entries ` in Lacs
` `
Goods in Transit A/c Dr. 10
To Head Office A/c 10
(Goods dispatched by head office but not received by branch
before 1st April, 2013)
Expenses A/c Dr. 1
To Head Office A/c 1
(Amount charged by head office for centralized services)
Trading Profit & Loss Account of the Branch

For the year ended 31 st March, 2013
` in lacs ` in lacs
To Opening Stock 60 By Sales 360
To Goods received from By Closing Stock in hand 62
Head Office 288
Less: returns 5 283
To Carriage Inwards 7
To Gross Profit c/d 72 ___
422 422
To Salaries 25
To Depreciation on Furniture 2 By Gross Profit b/d 72
To Rent 10
To Advertising 6
To Telephone, Postage & Stationery 3
To Sundry Office Expenses 1
To Head Office Expenses 1
To Net Profit Transferred to
Head office A/c 24
72 72
Balance Sheet as on 31 st March, 2013
Liabilities ` in lacs Assets ` in lacs
Head Office 80 Furniture & Equipment 20
Add: Goods in transit 10 Less: Depreciation 2 18
Head Office Stock in hand 62
Expenses 1 Goods in Transit 10
Net Profit 24 115 Debtors 20
Outstanding Expenses 3 Cash in Hand & Bank 8
118 118
(iii) Books of Head Office

Journal Entries (` in lacs)
Particulars ` `
Branch Trading Account Dr. 355
To Branch Account 355
(The total of the following items in branch trial balance debited to
branch trading account
Opening stock Dr. 60

Goods received from Head Office Dr. 288
Carriage Inwards Dr. (7)
341
To Branch Trading Account 341

(Total sales, closing stock and goods returned to Head office credited
to branch trading account individual Amounts being as follows:)
Sales Dr. 360

Closing Stock Dr. 62
Goods received from Head Office Dr. 5 427
To Branch Trading A/c 427
Branch Trading A/c

To Branch Profit and Loss Account 72
(Gross profit earned by branch credited to Branch 72
Profit & Loss Account)
Branch Profit and Loss Account Dr. 48

To Branch Account 48
(Total of the following branch expenses debited to branch P/L A/c)
Salaries 25
Rent 10
Advertising 6
Telephone, Postage & Stationery 3
Sundry Office Expenses 1
Head Office Expenses 1
Depreciation on furniture & Equipment 2
Branch Profit & Loss Account 24 72
To P/L A/c 72
(Net profit at branch credited to (general) Profit & Loss A/c)
Branch Furniture & Equipment Dr. 18

Branch Stock Dr. 62
Branch Debtors Dr. 20
Branch Cash at Bank and in Hand Dr. 8
Goods in Transit Dr. 10
To Branch A/c 118
(Incorporation of different assets at the branch in H. O. books)
Branch Dr. 3
To Branch Outstanding Expenses 3
(Incorporation of Branch Outstanding Expenses in H. O. books)
Problem. 40
KP manufactures a range of goods which it sells to wholesale customers only from its head office. In addition,
the H.O. transfers goods to a newly opened branch at factory cost plus 15%, The branch then sells these goods
to the general public on only cash basis.
The selling price to wholesale customers is designed to give a factory profit which amounts to 30% of the sales
value. The selling price to the general public /s designed to give a gross margin (i.e. selling price less cost of
goods from H. 0.) of 30% of the sales value.
KP operates from rented premises and leases all other types of fixed assets. The rent and hire charges for these
are included in the overhead costs shown in the trial balances.
From the information given below, you are required to prepare for the year ended 31st Dec., 2012 in columnar
form.
(a) A Profit & Loss account for (i) H. 0. (ii) the branch (iii) the entire business.
(b) Balance Sheet as on 31st Dec., 2012 for the entire business.
H.O. Branch
` ` ` `
Raw materials purchased 35,000
Direct wages 1,08,500
Factory overheads 39,000
Stock on 1-1-2012
Raw materials 1,800
Finished goods 13,000 9,200
Debtors 37,000
Cash 22,000 1,000
Administrative Salaries 13,900 4,000
Salesmen's Salaries 22,500 6,200
Other administrative & selling overheads 12,500 2,300
Inter-unit accounts 5,000 2,000
Capital 50,000
Sundry Creditors 13,000
Provision for unrealized profit in stock 1,200
Sales 2,00,000 65,200
Goods sent to Branch 46,000
Goods received from H 0. 44,500
3,10,200 3,10,200 67,200 67,200
Notes:
(1) On 28th Dec., 2012 the branch remitted ` 1,500 to the H.O. and this has not yet been recorded in the
H.O. books. Also on the same date, the H.O. dispatched goods to the branch invoiced at ` 1,500 and
these too have not yet been entered into the branch books. It is the company's policy to adjust items in
transit in the books of the recipient.
(2) The stock of raw materials held at the H.O. on 31st Dec., 2012 was valued at ` 2,300.
(3) You are advised that:
 there were no stock losses incurred at the H.O. or at the branch.
 it is KP's practice to value finished goods stock at the H.O. at factory cost.
 there were no opening or closing stock of work -in-progress.
(4) Branch employees are entitled to a bonus of ` 156 under a bilateral agreement.
[S.M., Page No.- 8.43, Illus.-14]
Problem. 41
How will you translate the following items of the London Branch as on 31.3.2002:
Opening Stock $ 4,100, Goods from H.O. $ 29,400,
Salaries & Wages $ 7,600, Sales $ 52,600,
Closing Stock $ 1,200.
Goods sent to London Branch in the H.O. Books amounted to ` 10,73,100,
Exchanges rate:
on 1.4.2001 $ 1 = ` 26.40, on31.3.2002 $ 1 = ` 42.20,
Average of 2001 – 2002 $ 1 = ` 36.50.
Solution Statement showing the Translation into Rupees
Item $ Relevant Exchange Rate Translated value in `

Opening Stock 4,100 Opening Rate as on 1.4.2001 4,100 x ` 26.40 = ` 1,08,240
Goods from H.O. 29,400 To be taken at the Rupee
Value recorded in H.O. Books `10,73,100
Salaries & Wages 7,600 Average Rate of 2001-2002 7,600 x ` 36.50 = ` 2,77,400
Sales 52,600 Average Rate of 200l -2002 52,600 x ` 36.50 = ` 19, 19,900
Closing Stock 1,200 C1osing Rate as on 31.3.2002 1,200 x ` 42.20 = ` 50,640
Problem. 42
The New York Branch of Fine Textiles Limited, Delhi sent the following Trial Balance (in Dollars) as on 31 st
Dec., 2003:
Stock, 1st Jan., 2003 56,000
Goods from H.O. 3,20,000
Sales Expenses 25,000 Sales 4,20,000
Debtors and Creditor 24,000 17,000
Cash at Bank 6,000 H.O. Account 1,14,000
5,51,000 5,51,000
In the H.O. Books, the Branch Account stood as shown below:
New York Branch Account
To Balance b/d 10,05,000 By Cash 26,08,000
To Goods sent to Branch 24,63,000 By Balance c/d 8,60,000
34,68,000 34,68,000
(a) Goods are invoiced to the branch at cost plus 10% and the branch has instruction to sell at invoice price plus
25%.
(b) Fixed assets were acquired on 1st Jan., 20Xl when $100 = ` 380.
(c) Rates of exchange were :
1st January, 2003 $ 100 = ` 760
st
31 December, 2003 $ 100 = ` 770
Average $ 100 = ` 750
(d) Fixed Assets have to be depreciated by 10%.
(e) The Branch Manager is entitled to commission of 5% on the profit of the branch (on invoice price basis)
after charging such commission.
(i) Prepare Branch Trading and Profit & Loss Account and Branch Balance Sheet in Dollars;
(ii) Convert the Branch Balance Sheet prepared in dollar into rupees;
(iii) Convert the Branch Trial Balance into rupees and prepare the Branch Trading & : Profit & Loss
Account and the Branch Account and Branch Balance Sheet in rupees;
Solution (i) New York Branch Trading & Profit & Loss Account (in Dollars)
Dr. for the year ending on 31 st Dec, 2003 Cr.
To Opening Stock 56,000 By Sales 4,20,000
To Goods from H.O. 3,20,000 By Closing Stock (balancing figure) 40,000
To Gross Profit c/d
(Rs 4,20,000  20/100) 84,000 _______
4,60,000 4,60,000
To Selling Expenses 25,000 By Gross Profit b/d 84,000
To Depreciation 12,000
To Commission (Rs 47,000  5/105) 2,238
To Profit 44,762
84,000 84,000
Balance Sheet as at 31 st Dec, 2003 (In dollars)
Liabilities $ Assets $
Creditors 17,000 Fixed Assets (120000-12000) 1,08,000
Commission Payable 2,238 Closing Stock 40,000
H.O. Account: Debtors 24,000
Balance 1,14,000 Cash at Bank 6,000
Add. Profit 44,762 1,58,762
1,78,000 1,78,000
(ii) Balance Sheet as at 31 st Dec 20X3 (in Rupees)

Creditors 1,30,900 Fixed Assets 4,10,400
Commission Payable 17,232 Closing Stock 3,08,000
H.O. Account: Debtors 1,84,800
Balance 8,60,000 Cash 46,200
Add: Profit 3,35,715 11,95,715 Difference in Exchange 3,94,447
13,43,847 13,43,847
(iii) Statement showing conversion of branch trial balance into H.O. currency
Particulars Rate (Dr.) $ (Cr.) $ (Dr.)` (Cr.) `
Fixed Assets 3.8 1,20,000 - 4,56,000
Stock 1.1.2003 7.6 56,000 - 4,25,600 -
Goods from H.O. - 3,20,000 - 24,63,000 -
Sales 7.5 - 4,20,000 - 31,50,000
Expenses 7.5 25,000 - 1,87,500 -
Debtors/Creditors 7.7 24,000 17,000 1,84,800 1,30,900
Cash at Bank 7.7 6,000 - 46,200 -
H.O. Account - - 1,14,000 - 8,60,000
Difference in exchange - - - 3,77,800 -
5,51,000 5,51,000 41,40,900 41,40,900
Closing Stock 7.7 40,000 3,08,000
(iv) New York Branch Trading and Profit & Loss Account
Working Note:
Profit before manager commission
(84,000 - 25,000-12,000) = 47,000
Less: Commission 5% (47,000×5/105) 2,238
Profit after commission (100 %) 44,762

Closing stock = $ 40,000× 7.7 = ` 3,08,000
O/s commission = $ 2,238 × 7.7 = 17,232
Dr. for the year ending on December 31, 2003 Cr.
To Goods from H.O. 24,63,000 By Closing Stock 3,08,000
To Gross Profit c/d 5,69,400
34,58,000 34,58,000
To Expenses 1,87,500 By Gross Profit b/d 5,69,400

To Depreciation 45,600 By Net Loss 58,732
To Commi. ($ 2,238 @ $ 100 = 770) 17,232
To Difference in Exchange 3,77,800
6 ,28, 132 6,28, 132
Dr. New York Branch Account Cr.
To Balance b/d 8,60,000 By Net Loss 58,732
8,60,000 8,60,000
(vi) Balance Sheet as at 31.12.2002 (As per Trial Balance in ` )

Creditors 1,30,900 Fixed Assets 4.10,400
Commission Payable 17,232 Stock 3,08,000
H.O. A/c 8,60,000 Debtors 1,84,800
Less : Loss 58, 732 8,01,268 Cash 46,200
9,49,400 9,49,400
Particulars H.O.(Dr) ` (Cr.) ` Branch ( Dr ) $ Branch Cr. $

Capital A/c 7,50,000
Land and Building 1,50,000
Goodwill 75,000
Plant & Machinery 12,00,000 1,80,000
Fur. And Fittings 45,000 12,000
Stock 1.1.87 5,10,000 84,000
Purchases 31,68,000 3,60,000
Goods from H.O. 1,20,000
Goods to N.Y. Branch 11,78,000
Sales 34,82,000 6,24,000
Salaries and Wages 1,44,000 12,000
Rent, Rates &Taxes 18,000 3,000
Insurance 10,500 1,500
Trade Expenses 27,000 3,000
Head Office 1,71,000
N.Y. Branch 12,33,500
Sundry Debtors 3,30,000 36,000
Sundry Creditors 16,69,000 25,500
Cash in Hand and with banks 1,68,000 9,000
70,79,000 70,79,000 8,20,500 8,20,500
Problem. 43
Following are the Balances of Bombay Head Office and New York Branch on 31.12.1987:
1. Stock as on 31.12.1987 was valued at: Head Office ` 4,38,000 N.Y. Branch $ 78,000
2. Depreciation on Plant and Machinery and Furniture and Fittings to be provided at 10% p.a.
3. Rates of Exchange were
(i) When Plant and Machinery and Fixtures were purchased $ 100= ` 780
(ii) On 1.1.87: $ 100 = ` 850
(iii) On 31.12.1987: $ 100 = ` 950
(iv) Average Rate $ 100=` 970.
You are required to prepare a Combined Columnar Profit and Loss Account and Balance Sheet of Head
Office and the Branch.
Solution Branch A/c

1. Statement showing conversion of foreign Branch T.B. into H.O. Currency
Particulars Dr. $ Cr. $ Exchange Rate Dr. ` Cr. `
Plant & Machinery 1,80,000 - 7.8 DOA 14,04,000
Furniture & Fixtures 12,000 - 7.8 AA 93,600
Opening stock 84,000 - 8.5 (OR) 7,14,000
Purchase 3,60,000 - 9.7 (AR) 34,92,000
Goods from Head 1,20,000 - Goods sent to 11,78,000
Office - 6,24,000 branch 60,52,800
Sales 12,000 - 9.7 1,16,400
Salary & Wages 3,000 - 9.7 29,100
AR
Rents taxes 1,500 - 9.7 14,550
Insurance 3,000 - 9.7 29,100
Trade Exps. - 1,71,000 9.7
Head Office 36,000 - Branch A/c 12,33,500
Sundry Debtors - 25,500 9.5 3,42,000
Sundry Creditors 9.5 CR 2,42,250
Cash in hand & 9,000 - 9.5 85,500
with banks 30,300
Foreign exchange
fluctuation a/c (b/f) 78,000 7,41,000
Closing Stock $ C.R. 9.5
Trading & P/L A/c for the year ended 31.12.87

Particulars Head Office Branch Particulars Head Office Branch
To Opening Stock 5,10,000 7,14,000 By Sales 34,82,000 60,52,800
To purchase 31,68,000 34,92,000 By Goods sent to
To Goods send from Branch 11,78,000 -
Head office - 11,78,000 By Closing stock 4,38,000 7,41,000
To Gross Profit 14,20,000 14,09,800
50,98,000 67,93,000 50,98,000 67,93,800
To Sales & Wages 1,44,000 1,16,400 By Gross Profit 14,20,000 14,09,800
To Rent & rate 18,000 29,100
To Interest 10,500 14,550
To Trade expense 27,000 29,100
To Foreign exchange - 30,300
fluctuation
To Dep.
Plant & Machinery 1,20,000 1,40,400
Furniture & Fixtures 4,500 9,360
To Net Profit 10,96,000 10,40,590
14,20,000 14,09,000 14,20,000 14,09,800
Balance Sheet

Capital 7,50,000 - Land & Building 1,50,000
H.O A/c - 12,33,500 Goodwill 75,000
P/L A/c 10,96,000 10,40,590 Plant & Machinery 10,80,000 12,63,600
Creditors 16,69,000 2,42,250 Furniture 40,500 84,240
Branch A/c 12,33,500 -
Debtor 3,30,000 3,42,000
Cash & Bank 1,68,000 85,500
Closing Stock 4,38,000 74,100
35,15,000 25,16,340 35,15,000 25,16,340
Problem. 44
Carlin & Co. has head office at New York (USA) and branch at Mumbai (India). Mumbai branch furnishes you
with its trial balance as on 31st March, 2013 and the additional information given thereafter:
Dr. Cr.(` in thousands)
Stock on 1st April 2012 300 —
Purchases and sales 800 1,200
Sundry debtors and creditors 400 300
Bills of exchange 120 240
Wages and salaries 560 —
Rent rates and taxes 360 —
Sundry charges 160 —
Computers 240 —
Bank balance 420 —
New York Office a/c — 1,620
3,360 3,360
Additional information:
(a) Computers were acquired from a remittance of US$ 6000 received from New York head office and paid to
the suppliers. Depreciate computers at 60% for the year.
(b) Unsold stock of Mumbai branch was worth ` 4,20,000 on 31st March 2013.
(c) The rates of exchange may be taken as follows :
(i) On 1.4 2012 @ ` 40 per US $
(ii) On 31.3.2013 @ ` 42 per US $
(iii) Average exchange rate for the year @ ` 41 per US $
(iv) Conversion is $ shall be made up to two decimal accuracy.
You are asked to prepare in US dollars the revenue statement for the year ended 31 st March, 2013 and the
balance sheet as on that date on Mumbai branch as would appear in the books of New York head office of
Carlin & Co. You are informed that Mumbai branch account showed a debit balance of US $ 39609. 18 on
31.3.2013 in New York books and there were no item pending reconciliation.
Solution Trading P/L A/c

To Opening Stock 7500.00 By Sales 29268.29
To Purchase 19512.20 By Closing Stock 10,000
To W&S 13658.54 By Gross Loss 1402.45
To Gross Loss 1402.45

To Rent & Taxes 8780.49
To Sundry Charges 3902.44
To Depreciation on Computer
(6000 × 60%) 3600 By Net Loss 17685.38
17685.38 17685.38
An Extract of Balance Sheet of CAMII & Co. as at 31 st March, 2013

Cred itors 7,142.86 Co mputer 6,000
Bills Payable 5,714.29 Less: Depreciation 3,600 2,400.00
H.O. 39,609.18 Debtors 9,523.81
Less: Net Loss 17,685.38 21,923.8 Bills Receivable 2,857.14
Bank Balance 10,000.00
_______ Closing Stock 10,000.00
34,780.95 34,780.95
Working Notes: Statement showing conversion of Trial Balance in $
Particulars Rate ` (000) ` (000) $ $
Stock as on 1st April, 2001 40 300 7,500.00
Purchase & Sales 41 800 1,200 19,512.20 29,268.29
Debtors/Creditors 42 400 300 9,523.81 7,142.86
Bills of Exchange 42 120 240 2,857.14 5,714.29
Wages & Salaries 41 560 13,658.54
Rent, Rates and Taxes 41 360 8,780.49
Sundry charges 41 160 3,902.44
Computers - 240 6.000.00
Bank balance 42 420 10,000.00
New York Office A/c - 1,620 39,609.18
3,360 3,360 81,734.62 81,734.62
Closing Stock 42 4,20,000 10,000 -
Problem. 45
An Indian company has a branch at Washington. Its Trial Balance as at 30 th September, 2012 is as
follows:
Dr. Cr.
US $ US $
Plant and machinery 1,20,000 —
Furniture and fixtures 8,000 —
Stock, Oct. 1, 2011 56,000 —
Purchases 2,40,000 —
Sales — 4,16,000
Goods from Indian Co. (H.O.) 80,000 —
Wages 2,000 —
Carriage inward 1,000 —
Salaries 6,000 —
Rent, rates and taxes 2,000 —
Insurance 1,000 —
Trade expenses 1,000 —
Head office A/c — 1,14,000
Trade debtors 24,000 —
Trade creditors — 17,000
Cash at bank 5,000 —
Cash in hand 1,000 —
US $ 5,47,000 US $ 5,47,000
The following further information is given:
(1) Wages outstanding -$ 1,000.
(2) Depreciate Plant and Machinery and Furniture and Fixtures @ 10 per cent p.a.
(3) The Head Office sent goods to Branch for ` 39,40,000.
(4) The Head office shows an amount of ` 43,00,000 due from Branch.
(5) Stock on 30th September, 2012 - $ 52,000.
(6) There were no in transit items either at the state or at the end of the year.
(7) On September 1, 2010 when the fixed assets were purchased, the rate of exchange was ` 38 to one $.
On October 1, 2011 the rate was ` 39 to one $.

On September 30, 2012 the rate was ` 41 to one $.
Average rate during the year was ` 40 to one $.
You are asked to prepare:
(a) Trial balance incorporating adjustments given under 1 to 4 above, converting dollars into rupees;
(b) Trading and Profit and Loss Account for the year ended 30th September, 2012 and Balance sheet as on that
date depicting the profitability and net position of the branch as would appear in India for the purpose of
incorporating in the main Balance Sheet.
Solution Converted Trial Balance as on 30 Sept. 2012

Particulars Dr. $ Cr. $ Rate Dr. ` Cr. `
Plant and Machinery 1,08,000 38 41,04,000
Depreciation on above 12,000 38 4,56,000
Furniture and fixtures 7,200 38 2,73,600
Depreciation on above 800 38 30,400
Stock 1.10.2011 56,000 39 21,84,000
Purchases 2,40,000 40 96,00,000
Sales 4,16,000 40 1,66,40,000
Goods from Indian Co. 80,000 Actual 39,40,000
Wages (2,000 + 1,000) 3,000 40 1,20,000
Outstanding wages 1,000 41 41,000
Carriage Inwards 1,000 40 40,000
Salaries 6,000 40 2,40,000
Rent, rates and taxes 2,000 40 80,000
Insurance 1,000 40 40,000
Trade expenses 1,000 40 40,000
Head office A/c l,14,000 Actual 43,00,000
Trade debtors 24,000 41 9,84,000
Trade creditors 17,000 41 6,97,000
Cash at bank 5,000 41 2,05,000
Cash in hand 1,000 41 41,000
Difference in exchange 7,00,000
5,47,000 5,47,000 2,23,78,000 2,23,78,000
Closing stock at ` 41 per dollar i.e. 52,000  41 = ` 21,32,000.

Note:
(ii) It is assumed that no depreciation on fixed assets has been charged since the date of purchase.
Therefore fixed assets as shown in the Trial balance are at original cost and the given rate of 10% is on
straight line method.
(iii) If rate of depreciation is at 10% on written down value basis and value of fixed assets in the Trial
balance are at written down value on 1.10.2011.
In both the above cases the depreciation figure will remain the same
Dr. Trading, Profit & Loss Account Cr.

for the year ended 30.9.2012
To Opening stock 21,84,000 By Sales 1,66,40,000
To Purchases 96,00,000 By Closing stock 21 ,32,000
To Goods from H.O. 39,40,000
To Wages 1,20,000
To Carriage Inward. 40,000
To Gross Profit c/d 28,88,000
1,87,72,000 By Gross Profit b/d
1,87,72,000
To Salaries 2,40,000 28,88,000
To Rent Rates & taxes 80,000

To Insurance 40,000
To Trade expenses 40,000
To Depreciation
Machinery 4,56,000
Furniture 30,400 4,86,400
To Net Profit Loss 20,01,600
28,88,000
To Net Profit to H.O 27,01,600 By Net Profit 28,88,000
By Difference in exchange 20,01,600
7,00,000
27,01,600 27,01,600
Branch Balance Sheet as at 30 th Sept. 2012
Liabilities ` Assets ` `
Head Office A/c 43,00,000 Plant & Machinery 45,60,000
Profit & Loss A/c 27,01,600 Less Depreciation 4,56,000 41,04,000
Creditors 6,97,000 Furniture & fitting 3,04,000
Outstanding wages 41,000 Less: Depreciation 30,400 2,73,600
Stock 21,32,000
Debtors 9,84,000
Cash at Bank 2,05,000
Cash in hand 41,000
77,39,600 77,39,600
Problem. 46
The Washington branch of XYZ Mumbai sent the following trial balance as on 31st December, 2012:
$ $
Head office A/c - 22,800
Sales - 84,000
Debtors and creditors 4,800 3,400
Machinery 24,000 -
Cash at bank 1,200 -
Stock, 1 January, 2012 11,200 -
Goods from H.O. 64,000 -
Expenses 5,000 -
1,10,200 1,10,200
In the books head office, the Branch A/c stood as follows:
Washington Branch A/c
` `
To Balance b/d 8,10,000 By Cash 28,76,000
To Goods sent to branch 29,26,000 By Balance c/d 8,60,000
37,36,000 37,36,000
Goods are sent to the branch at cost plus 10% and the branch sells goods at invoice price plus 25%. Machinery
was acquired on 31st January, 2007, when $ 1.00= 40.
Rates of exchange were:
1st January, 2012 $ 1.00 = ` 46
31st December, 2012 $ 1.00 = ` 48
Average $ 1.00 = ` 47
Machinery is depreciated @ 10% and the branch manager is entitled to a commission of 5% on the profits of the
branch.

(i) Prepare the Branch Trading & Prom & Loss A/c in dollars.
(ii) Convert the Trial Balance of branch into Indian currency and prepare Branch Trading & Profit and Loss
A/c and the Branch A/c in the books of head office. [P.M. Page – 8.39, Q. No – 21]
Solution
(i) Branch Trading & P/L A/c in US$

To Opening Stock 11,200 By Sales 84,000
To Gross from H.O 64,000 By Closing Stock (b/c) 8,000
To Gross Profit (84,000 × 25/125) 16,800
92,000 92,000
To Depreciation (6000 × 60%) 2400 By Gross Profit 16800
To Expense 5000
To Branch Manager commission 470
(16800 -5000-2900 × 5/100)
To Net Profit 8930
16,800 16,800
Branch B/s in $

Head office A/c 22800 Machinery 24000
P/L A/c 8930 Less: Depreciation 2400 21600
O/S Managers Commission 470 Debtor 4800
Creditors 3400 Land & Building 1200
Closing Stock 8000
35,600 35,600
(ii) Statement of conversion of Branch

Trial Balance in `
Particulars $ Ex. `
Dr. Cr. Rate Dr. Cr.
H.O - 22800 Br. A/c - 860000
Sales - 84000 AR - 47 - 3948000
Debtor/Creditor 4800 3400 CR – 48 230400 163200
Machinery 2400 - 40 960000 -
Cash & Bank 1200 - CR – 48 57600 -
Opening stock 11200 - OR – 46 515200 -
Goods from H.O 64000 - Goods sent to branch 2926000 -
Expense 5000 - AR - 47 235000 -
Foreign Exchange Fluctuation - - 47000 -
4971200 4971200
Closing stock = $8000 × 48 = 384000
O/S Manager’s Commission = $470 × 48 = 22560
Branch A/c
To B/d 860000 By Branch Debtor 230400
To O/S Manager Commission 22560 By Branch Machinery 864000
To Branch Creditor 163200 By Branch Cash & Bank 57600
To P/L A/c 490240 By Closing Stock 384000
15,36,000 15,36,000
Branch Trading & P/L A/c

To Opening Stock 515200 By Sales 3948000
To Gross from H.O 292600 By Closing Stock 384000
To Gross Profit 890800
To Foreign Exchange Fluctuation 47000 By Gross Profit 890800

To Expense 235000
To Branch Manager commission 22560
To Depreciation on Machinery 96000
To Net Profit 490240
8,90,800 8,90,800
Balance Sheet

Head office A/c 860000 Machinery 864000
P/L A/c 490240 Debtor 230400
O/S Managers Commission 22500 Cash & Bank 57600
Creditors 163200 Closing Stock 384000
15,36,000 15,36,000
Problem. 47
On 31 st March, 2010, the following Ledger balances have been extracted from the books of
Washington branch office:
Ledger A/c $
Building 180
Stock as on 1.4.2009 26
Cash and Bank Balances 57
Purchases 96
Sales 110
Commission receipts 28
Debtors 46
Creditors 65
You are required to convert above Ledger balances into Indian Rupees.
Use the following rates of exchange:
Opening Rate $ = 46
Closing Rate $ = 50
Average Rate $ = 48
For Fixed Assets $ = 42 [May-2010]
Solution
Particulars Rate Amount
Details ` $ `
Building Rate at the date of actual
purchase 42 180 7560
Stock(1.4.2009) Opening rate 46 26 1196
Cash & Bank Closing rate 50 57 2850
Purchase Average rate 48 96 4608
Sales Average rate 48 110 5280
Commission Receipts Average rate 48 28 1344
Debtors Closing rate 50 46 2300
Creditors Closing rate 50 65 3250
Problem. 48
An Indian Company Moon Star Limited has a Branch at Verginia (USA). The Branch is a non-integral foreign
operation of the Indian company. The trail balance of the branch as at 31st March, 2012 is as follows:
Particulars US $
Dr. Cr.
Office equipments 48,000
Furniture and Fixtures 3,200
Stock (April 1, 2011) 22,400
Purchases 96,000
Sales - 1,66,400
Goods sent from H.O. 32,000
Salaries 3,200
Carriage inward 400
Rent, Rates & Taxes 800
Insurance 400
Trade Expenses 400
Head Office Account - 45,600
Sundry Debtors 9,600
Sundry Creditors - 6,800
Cash at Bank 2,000
Cash in Hand 400
2,18,800 2,18,800
The following further information are given:
(1) Salaries outstanding $ 400.
(2) Depreciate office equipment and Furniture & Fixture @ 10% p.a. at written down value.
(3) The Head Office sent goods to Branch for ` 15,80,000.
(4) The Head Office shown an amount of ` 20,50,000 due from branch.
(5) Stock on 31st March, 2012- $ 21,500
(6) There were no transit items either at the start or at the end of the year.
(7) On April 1, 2010 when the fixed assets were purchased the rate of exchange was ` 43 to one $. On
April 1, 2011, the rate was ` 47 per $. On March 31, 2012, the rate was ` 50 per $. Average Rate during
the year was ` 45 to one $.
Prepare
(a) Trail balance incorporating adjustment given converting dollars into rupees.
(b) Trading, profit and Loss Account for the year ended 31st March, 2012 and Balance Sheet as on date
depicting the profitability and net position of the Branch as would appear in the books of Indian
Company for the purpose of incorporating in the main Balance Sheet.
[May-2012]
Solution (i) Conversion of Trial Balance
Particulars Rate $ `
Dr. Cr. Dr. Cr.
Office equipment 50 43,200 21,60,000
Depreciation on office equipment 50 4,800 2,40,000
Furniture & Fixtures 50 2,880 1,44,000
Depreciation on Furniture 50 320 16,000
Stock (Opening) 47 22,400 10,52,800
Purchases 45 96,000 43,20,000
Sale 45 - 1,66,400 74,88,000
Goods received from HO - 32,000 15,80,000 -
Salaries [3200 + 400] 45 3,600 - 1,62,000
Outstanding Salary 50 400 - 20,000

Carriage inward 45 400 18,000
Rent, Rates & Taxes 45 800 36,000
Insurance 45 400 18,000
Trade expense 45 400 18,000
Head Office A/c - 45,600 - 20,50,000
Sundry Debtor 50 9,600 - 4,80,000 -
Sundry Creditor 50 - 6,800 3,40,000
Cash at bank 50 2,000 - 1,00,000 -
Cash in hand 50 400 - 20,000 -
Foreign Exchange translation reserve (b/f) - 4,66,800
10364800 10364800
Trading and Profit & Loss A/c

To Purchase 43,20,000 By Closing Stock (21,500 × 50) 10,75,000
To Goods from HO 15,80,000
To Carriage 18,000
To Gross Profit (b/f) 15,92,200
85,63,000 85,63,000
To Salaries 1,62,000 By Gross Profit 15,92,200
To Rent, Rates & Taxes 36,000
To Insurance 18,000
To Trade Exp. 18,000
To Depreciation
- Office equipment 2,40,000
- Furniture 16,000
To Net Profit 11,02,200
15,92,000 15,92,000
Balance Sheet
Head Office A/c 20,50,000 Office equipment 21,60,000
(+) Net Profit 11,02,200 Furniture 1,44,000
Stock 10,75,000
Translation Reserve 4,66,800 Sundry debtor 4,80,000
Salary outstanding 20,000 Cash at Bank 1,00,000
Sundry Creditor 3,40,000 Cash in Hand 20,000
39,79,000 39,79,000
Note: Questions requires preparation of financial statement assuming Non – integral operation hence
conversion rule of NIFO is applied.
Problem. 49
Pass necessary Journal entries in the books of an independent Branch of a Company, wherever required, to
rectify or adjust the following:
(i) Income of ` 2,800 allocated to the Branch by Head Office but not recorded in the Branch books.
(ii) Provision for doubtful debts, whose accounts are kept by the Head Office, not provided earlier for `
1,000.
(iii) Branch paid ` 3,000 as salary to a Head Office Manager, but the amount paid has been debited by the
Branch to Salaries Account.
(iv) Branch incurred travelling expenses of ` 5,000 on behalf of other Branches, but not recorded in the
books of Branch.
(v) A remittance of ` 1,50,000 sent by the Branch has not received by Head Office on the date of
reconciliation of Accounts.
(vi) Head Office allocates ` 75,000 to the Branch as Head Office expenses, which has not yet been recorded
by the Branch.
(vii) Head Office collected ` 30,000 directly from a Branch Customer. The intimation of the fact has been
received by the Branch only now.
(viii) Goods dispatched by the Head office amounting to ` 10,000, but not received by the Branch till date of
reconciliation. The Goods have been received subsequently.
[May – 2014, 12 Marks]
Solution Journal Entries in the books of Independent Branch
S.No. Particulars Amount (Dr) Amount (Cr)
(i) Head Office Dr. 2,800
To Income A/c 2,800
(Being income allocated to branch by H.O.)
(ii) Provision for Doubtful Debts A/c Dr. 1,000
(Being Provision for Doubtful debts provided)
(iii) Head Office A/c Dr. 3,000
To Salaries A/c 3,000
(Being the rectification of salary paid on behalf of H.O)
(iv) Head Office A/c Dr. 5,000

To Cash/ Bank A/c 5,000
(Being the expenditure on account of other branches
recorded in books)
(v) No entry
(vi) Expenses A/c Dr. 75,000
(Being the allocated expenditure by the head office
recorded in branch books)
(vii) Head Office A/c Dr. 30,000
To Debtors A/c 30,000
(Being the adjustment of collection from branch
debtors)
(viii) Goods in transit A/c Dr. 10,000
(Being goods dispatched by H.O but yet not received)
Problem. 50
LMN is having branch at Mumbai. Goods are invoiced to the branch at 25% profit on sale. Branch has been
instructed to send all cash daily to head office. All expenses are paid by head office except petty expenses,
which are met by the branch. From the following particulars, prepare branch account in the books of head
office:
Particulars Amount Particulars Amount (` )

(`)
Stock as on 1st April, 2013 (invoice price ) 40,000 Discount allowed to debtors 300
Sundry Debtors as on 1st April, 2013 25,000 Expenses paid by head office:
Cash in hand as on 1st April, 2013 1,000 Salary 4,000
Office furniture as on 1st April, 2013 4,000 Staff welfare 750
Goods invoiced from the head office 1,80,000 Telephone expenses 1,200
(invoice price) Other miscellaneous expenses paid
Goods returned to head office 6,000 by branch 700
Goods return by debtors 1,250 Stock as on 31st March, 2014
Cash received from Debtors 65,000 (invoice price) 35,000
Cash sales 1,20,000 Depreciation to be provided on
Credit sales 70,000 branch furniture 10% p.a.
[Nov - 2014] 8 Marks
Solution Mumbai Branch Account
To opening balances: By stock reserve (40000×25/125) 8,000
Stock 40,000 By Bank:
Debtors 25,000 Cash sales 1,20,000
Cash 1,000 Collection from debtor 65,000 1,85,000
Furniture 4,000 By goods returned to H.O. 6,000
To goods received from H.O. 1,80,000 By closing balance:
To stock reserve (35000×25/125) 7,000 Stock 35,000
Debtors 28,450
Cash
Furniture (4000-10%) 3,600
Memorandum Branch Debtors A/c

To balance b/d 25,000 By goods returned by debtor 1,250
To credit sales 70,000 By discount 300
By cash 65,000
95,000 95,000
Problem. 51
M/s. Sandeep, having Head Office at Delhi has a Branch at Kolkata. The Head Office does Wholesale Trade
only at Cost plus 80%. The Goods are sent to Branch at the Wholesale Price, viz. cost plus 80%. The Branch at
Kolkata wholly engaged in Retail Trade and the goods are sold at cost to Head Office plus 100%.
Following details are furnished for the year ended 31st March 2014:
Particulars Head Office (`) Kolkata Branch (` )
Opening Stock (as on 01.04.2013) 1,25,000 –
Purchases 21,50,000 –
Goods sent to Branch (cost to H.O. plus 80%) 7,38,000 –
Sales 23,79,600 7,30,000
Office Expenses 50,000 4,500
Selling Expenses 32,000 3,300
Staff Salary 45,000 8,000
Prepare Trading and Profit & Loss Account of the Head Office and Branch for the year ended 31 st March 2014.
[May - 2015] 8 Marks
Solution A. Trading and Profit and Loss Account for the year ended on 31 st March (in ` )
Particulars HO Branch Particulars HO Branch

To Opening Stock 1,25,000 Nil By Sales 23,79,600 7,30,000
To Purchases 21,50,000 Nil By Goods Sent to Branch 7,38,000 Nil
To Goods received from HO – 7,38,000 By Closing Stock (WN 2,3) 5,43,000 81,000
To Gross Profit (bal. figure) 13,85,600 73,000
Total 36,60,600 8,11,000 Total 36,60,600 8,11,000
To Staff Salary 45,000 8,000 By Gross Profit b/d 13,85,600 73,000
To Office Expenses 50,000 4,500
To Selling Expenses 32,000 3,300
To NP trfd to General P&L (b/f) 12,58,600 57,200
Total 13,85,600 73,000 Total 13,85,600 73,000
B. General Profit and Loss Account
To Stock Reserve on Branch Closing By Head Office Profit b/d 12,58,600
 80  By Branch Profit b/d 57,200
Stock  81,000   36,000
 180 
To Net Profit (balancing figure) 12,79,800
Total 13,15,800 Total 13,15,800
Working Notes:
1. Computation of Loading Margin
Particulars `
Cost of Goods to Head Office 100
Add: Loading by HO to Branch 80
Whole Sale Price, i.e. Invoice Price to Branch 180
Sale Price at Branch 200
2. Closing Stock at Branch
Goods Received from HO at Whole Sale Price ` 7,38,000

Less: Sales converted into Wholesale Price (` 7,30,000 × 180) 200 ` 6,57,000
Closing Stock at Branch ` 81,000
3. Closing Stock of HO = Opening Stock + Purchase – Cost of Goods Sent to Branch – Cost of Goods Sold by
HO
 100   100 
= 1,25,000 + 21,50,000 –  7,38,000   -  23,79,600  
 180   180 
= 1,25,000 + 21,50,000 – 4,10,000 – 13,22,000 = ` 5,43,000.
Problem. 52
M/s ABC & Co. has head office at New York (U.S.A.) and branch in Bangalore (India). Bangalore branch is an
integral foreign operation of M/s ABC & Co.
Bangalore branch furnishes you with its trial balance as on 31st March, 2015 and the additional information
given thereafter:
Dr. Cr.
(Rupees in thousands)
Stock on 1st April, 2014 300 -
Purchases and Sales 800 1,200
Sundry Debtors & Creditors 400 300
Bills of Exchange 120 240
Wages & Salaries 560 -
Rent, Rates & Taxes 360 -
Sundry Charges 160 -
Computers 240 -
Bank Balance 420 -
New York Office A/c - 1,620
3,360 3,360
Additional Information:
(a) Computers were acquired from a remittance of US $ 6,000 received from New York head office, and
paid to the suppliers. Depreciate computers at 60% for the year.
(b) Unsold stock of Bangalore branch was worth ` 4,20,000 on 31st March, 2015.
(c) The rates of exchange may be taken as follows:
 On 01.04.2014 @ ` 55 per US$
 On 31.03.2015 @ ` 60 per US$
 Average exchange rate for the year @ ` 58 per US $
 Conversion in $ shall be made up to two decimal accuracy.
You are asked to prepare in US dollars the revenue statement for the year ended 31 st March, 2015 and
the balance sheet as on that date of Bangalore branch as would appear in the books of New York head
office of ABC & Co. You are informed that Bangalore branch account showed a debit balance of US $
29845.35 on 31.3.2015 in New York books and there were no items pending reconciliation.
[May - 2016]
Solution 1. Conversion of Bangalore Branch Trial Balance as at 31 st March 2015 into US Dollars
Particulars Debit Credit Rate per US $ Dr. Cr.
(` in 000's) (` In 000's) (`) US $ US $
Stock as on 01.04.2014 300 - 55 5,454.55 -
Purchases & Sales 800 1,200 58 13,793.10 20,689.66
Debtors & Creditors 400 300 60 6,666.67 5,000.00
Bills of Exchange 120 240 60 2,000.00 4,000.00
Wages & Salaries 560 - 58 9,655.17 -
Rent, Rates & Taxes 360 - 58 6,206,90 -
Sundry Charges 160 - 58 2,758.62 -
Computers 240 - Actual 6,000.00 -
Bank 420 - 60 7,000.00 -
New York Office A/c
Balance - 1,620 Actual - 29,845.35
Total 3,360 3,360 59,535.01 59,535.01
2. Trading and Profit & Loss Account for the year ended 31 st March 2015 (Amount in US $)

To Opening Stock 5,454.55 By Sales 20,689.66
To Purchases 13,793.10 By Closing Stock (` 4,20,000 ÷ 60) 7,000.00
To Wages & Salaries 9,655.17 By Gross Loss c/d (bai.fig) 1,213.16
Total 28,902.82 Total 28,902.82
To Gross Loss b/d 1,213.16 By Net Loss c/d to Balance Sheet (bai.fig) 13,778.68
To Rent, Rates & Taxes 6,206.90
To Sundry Charges 2,758.62
To Depn. On Computers 3,600.00
(6,000 x 60%)
Total 13,778.68 Total 13,778.68
3. Balance Sheet of Bangalore Branch as on 31 st March 2015 (Amount in US $)
Capital and Liabilities Amount Properties and Assets Amount

Capital: Fixed Assets:
New York Office A/c 29,845.35 Computers 6,000.00
Less: Net Loss for the year (13,778.68) Less: Depreciation (3,600.00) 2,400,00
Net Balance in HO A/c 16,066.67 Current Assets, Loans and Advances:
Current Liabilities & Provisions: Closing Stock 7,000.00
Sundry Creditors 5,000.00 Sundry Debtors 6,666.67
Bills Payable 4,000.00 Bank Balance 7,000.00
Bills Receivable 2,000.00
Total 25,066.67 Total 25,066.67
Problem. 53
Nee with headquarters at Mumbai, maintains a branch at Goa. Goods are invoiced at cost plus 25%. In respect
of Goa branch, the following information pertaining to the year ended 31st March 2013 are made available to
you.
`
Goods sent to Branch (at invoice price) 6,75,000
Goods returned by branch during the year (at Invoice price) 24,000
Cash Sales effected by branch 1,85,000
Discount allowed to customers 2,500
Amount received from branch debtors 3,25,000
Cheques of customers which got dishonoured 8,000
Branch expenses met in cash 72,500
Sales return at Goa Branch 10,000
Bad debts 5,500
st st
On 31 March. 2012 On 31 March. 2012
Branch debtors 1,05,000 50,000
Stock at branch (at invoice price) 2,36,000 1,50,000
Adopting the Stock and debtors system, you are required to prepare the following Ledger accounts, as
appearing in the books of the Head Office:
(i) Goa branch debtors account;
(ii) Goa branch adjustment account;
(iii) Goa branch profit and loss account.
[P.M. Page No. 8.22, Q.12]
Problem. 54
Pawan, of Delhi has a branch at Jaipur. Goods are invoiced to the branch at cost plus 25%. The branch is
instructed to deposit the receipts everyday in the head office account with the bank. All the expenses are paid
through cheque by the head office except petty cash expenses which are paid by the Branch.
From the following information, you are required to prepare Branch Account in the books of Head office:
`
Stock at invoice price on 1.4.2012 1,64,000
Stock at invoice price on 31.3.2013 1,92,000
Debtors as on 1.4.2012 63,400
Debtors as on 31.3.2013 84,300
Furniture & fixtures as on 1.1.2012 46,800
Cash Sales 8,02,600
Credit Sales 7,44,200
Goods invoiced to branch by head office 12,56,000
Expenses paid by head office 2,64,000
Petty expenses paid by the branch 20,900
Furniture acquired by the branch on 1.10.2012 (payment was made by the branch from cash
sales and collection from debtors) 5,000
Depreciation to be provided to branch furniture & fixtures @ 10% p.a. on WDV basis.
[P.M. Page No. 8.26, Q.14]
Problem. 55
M/s Rahul operates a number of retail outlets to which goods are invoiced at wholesale price which is cost plus
25%. These outlets sell the goods at the retail price which is wholesale price plus 20%.
Following is the information regarding one of the outlets for the year ended 31.3.2012:
`
Stock at the outlet 1.4.11 30,000
Goods invoiced to the outlet during the year 3,24,000
Gross profit made by the outlet 60,000
Goods lost by fire ?
Expenses of the outlet for the year 20,000
Stock at the outlet 31.3.12 36,000
You are required to prepare the following accounts in the books of Rahul Limited for the year ended 31.3.12:
(a) Outlet Stock Account
(b) Outlet Profit & Loss Account
(c) Stock Reserve Account
[S.M. Page No. 9.28, Illus.11]
Problem. 56
Messrs Ramchand & Co. Hyderabad have a branch in Delhi. The Delhi Branch deals not only in the goods from
Head Office but also buys some auxiliary goods and deals in them. They, however, do not prepare any Profit &
Loss Account but close all accounts to the Head Office at the end of the year and open them afresh on the basis
of advice from their Head Office. The fixed assets accounts are also maintained at the Head Office.
The goods from the Head Office are invoiced at selling prices to give a profit of 20 percent on the sale price.
The goods sent from the branch to Head Office are at Cost. From the following prepare Brach Trading and
Profit & Loss Account in the Head Office Books.
Trial Balance of the Delhi Brach as on 31-12-2012

Debit ` Credit `
Head office opening balance on 1-1-12 15,000 Sales 1,00,000
Goods from H.O. 50,000 Goods to H.O. 3,000
Purchases 20,000 Head Office Current A/c 15,000
Opening Stock Sundry Creditors 3,000
(H.O. goods at invoice prices) 4,000
Opening stock of other goods 500
Salaries 7,000
Rent 3,000
Office expenditure 2,000
Cash on Hand 500
Cash at Bank 4,000
Sundry Debtors 15,000
1,21,000 1,21,000
The Branch balances as on 1st January, 2012, were as under: Furniture ` 5,000; Sundry Debtors ` 9,500; Cash `
1,000; Creditors ` 30,000; Stock (H.O. goods at invoice price) ` 4,000; other goods ` 500. The closing stock at
branch of the head office goods at invoice price is ` 3,000 and that of purchased goods at cost is ` 1,000.
Depreciation is to be provided at 10 percent on branch assets.
Problem. 57
The following Trial balances as at 31st December, 2012 have been extracted from the books of Major Ltd. and
its branch at a stage where the only adjustments requiring to be made prior to the preparation of a Balance Sheet
for the undertaking as a whole.
Head Office Branch

Dr. Cr. Dr. Cr.
` ` ` `
Share Capital 1,50,000
Fixed Assets 75,125 18,901
Current Assets 1,21,809 23,715 (Note 3)
Current Liabilities 34,567 9,721
Stock Reserve, 1st Jan., 2012 (Note
2) 693
Revenue Account 43,210 10,250
Branch Account 31,536
Head Office Account 22,645
2,28,470 2,28,470 42,616 42,616
Note:
1. Goods transferred from Head Office to the Branch are invoiced at cost plus 10% and both Revenue
Accounts have been prepared on the bases of the prices charged.
2. Relating to the Head Office goods held by the Branch on 1st January, 2012.
3. Includes goods received from Head Office at Invoice price ` 4,565.
4. Goods invoiced by Head office to Branch at ` 3,641 were in transit at 31st December, 2012, as was also
a remittance of ` 3,500 from the Branch.
5. At 31st December, 2012, the following transactions were reflected in the Head Office books but
unrecorded in the Branch books.
The purchase price of lorry, ` 2,500, which reached the Branch on December 25th ; a sum received on
December 30, 2012 from one of the Branch debtors, ` 750.
You are required:
(i) to record the foregoing in the appropriate ledger accounts in both sets of books;
(ii) to prepare a Balance sheet as at 31st December, 2012 for the undertaking as a whole.
Problem. 58
ABCD Ltd. Delhi has a branch in New York, USA, which is an integral foreign operation of the company. At
the end of 31st March, 2013, the following ledger balances have been extracted from the books of the Delhi
office and the New York Branch:
Particulars Delhi Delhi

(` in thousands) (` thousands)
Share Capital 1,250
Reserve and Surplus 940
Land 475
Building (cost) 1,000
Buildings Depreciation Reserve 200
Plant & Machinery (cost) 2,000 100
Plant & Machinery Depreciation Reserve 500 20
Trade receivables/payables 500 270 60 20
Stock (01-4-2012) 250 25
Branch Stock Reserve 65
Cash & Bank Balances 125 4
Purchases/Sales 275 600 25 125
Goods sent to Branch 1,500 30
Managing Director’s salary 50
Wages & Salaries 100 18
Rent 6
Office Expenses 25 12
Commission receipts 275 100
Branch/H.O. Current A/c 800 15
5,600 5,600 280 280
The following information is also available:

1. Stock as at 31-3-2013
Delhi – ` 2,00,000
New York - $ 10 (all stock received from Delhi)
2. Head office always sent goods to the Branch at cost plus 25%.
3. Provision is to be made for doubtful debts at 5%.
4. Depreciation is to be provided on Buildings at 10% and on Plant and Machinery at 20% on written
down values.
You are required:
(a) To convert the branch Trial Balance into rupees, using the following rates of exchange:
Exchange:
Opening rate 1 $ = ` 50
Closing rate 1 $ = ` 55
Average rate 1 $ = ` 52
For fixed assets 1 $ = ` 45
(b) To prepare the Trading and Profit & Loss Account for the year ended 31st March, 2013, showing to the
extent possible, Head Office results and Branch results separately. [P.M. Page No. 8.48, Q.24]
Problem. 59
Mr. Chena Swami of Chennai trades in Refined Oil and Ghee. It has a branch at Salem. He despatches 30 tins
of Refined Oil @ ` 1,500 per tin and 20 tins of Ghee @ ` 5,000 per tin on 1st of every month. The Branch has
incurred expenditure of ` 45,890 which is met out of its collections; this is in addition to expenditure directly
paid by Head Office.
Following are the Other details:
Chennai H.O. Salem B.O.

Amount(`) Amount(`)
Purchases:
Refined Oil 27,50,000
Ghee 48,28,000
Direct Expenses 6,35,800
Expenses paid by H.O. 76,800
Sales:
Refined Oil 24,10,000 5,95,000
Ghee 38,40,500 14,50,000
Collection during the year (including Cash Sales) 20,15,000
Remittance by Branch to Head Office 19,50,000
Chennai H.O.
Balance as on 01.04.2015 31.03.2016
.. Amount(`) Amount(` )
Stock:
Refined Oil 44,000 8,90,000
Ghee 10,65,000 15,70,000
Building 5,10,800 7,14,780
Salem Branch Office

Balance as on 01.04.2015 31.03.2016
Amount(`) Amount(` )
Stock: -
Refined Oil 22,500 19,500
Ghee 40,000 90,000
Sundry Debtors 1,80,000 ?
Cash in Hand 25,690 ?
Additional information:
(i) Addition to Building on 01-04-2015 ` 2,41,600 by H.O.
(ii) Rate of depreciation: Furniture & Fixtures @ 10% and Building @5% (already adjusted in the above
figure).
(iii) The Branch Manager is entitled to 10% commission on overall organizational profits after charging
such commission.
(iv) The General Manager is entitled to a salary of ` 20,000 per month.
(v) General expenses incurred by Head Office is ` 1,86,000.
You are requested to prepare Branch Account in the Head Office books and also prepare Chena Swami's
Trading and Profit & Loss Account (excluding branch transactions) for the year ended 31 st March, 2016.
[Nov – 2016, 8 Marks]
Solution Branch Account

To B/d
Stock - Oil 22,500
- Ghee 40,000
Debtors 1,80,000
Cash 25,690
F&F 23,800
To Goods sent to Branch
Oil – (30 × 1500) × 12M 5,40,000 By Cash A/c
Ghee – (20 × 5000) × 12M 12,00,000 - Remittance by Branch 19,50,000
To Cash By C/d
- Paid by H.O 76,800 Closing Stock - Oil 19,500
To N.P transfer to Gen P/L A/c 2,26,930 - Ghee 90,000
Debtor 2,10,000
Cash 44,800
F&F 21,420
23,35,720 23,35,720
General P/L A/c
Particulars Amount Particulars Amounts

To Branch Manager commission 80,195 By Branch A/c 2,26,930
(882150 × 10/110)
To Net Profit of Company 8,01,955 By H.O A/c 6,55,220
8,82,150 8,82,150
Branch Debtor A/c

To B/d 25,690 By Bank 20,15,000
To Branch Debtor 20,15,000 By C/d 2,10,000
20,40,690 20,40,690
Branch Trading & P/L A/c

To Opening Stock By Sales to customer
- Oil 44,000 - Oil 24,10,000
- Ghee 10,65,000 - Ghee 38,40,500
To Purchase By transfer to Branch
-Oil 27,50,000 - Oil 5,40,000
-Ghee 48,28,000 - Ghee 12,00,000
To Direct Expense 6,35,800 By Closing Stock
To Gross Profit 11,27,700 - Oil 8,90,000
- Ghee 15,70,000
1,04,50,500 1,04,50,500
To Dep. - F&F 8,860 By Gross Profit 11,27,700
- Building 37,620
(510800 + 241600) × 5%
To General Manager commission 2,40,000
To General Expenses 1,86,000
To Net Profit (Transfer to General
P/L) 6,55,220
11,27,700 11,27,700
Problem 60.
Show Adjustment Journal Entry along with working notes in the books of head office at the end of
April, 2017 for incorporation of inter branch transactions assuming that only head office maintains
different branch account in its books:
(A) Delhi Branch:
(i) Received goods from Mumbai ` 1,40,000 and ` 60,000 from Kolkata.
(ii) Sent goods to Chennai ` 1,00,000, Kolkata ` 80,000
(iii) Bill receivable received ` 80,000 from Chennai
(iv) Acceptances sent to Mumbai ` 1,00,000, Kolkata ` 40,000
(B) Mumbai Branch (Apart from the above):
(i) Received goods from Kolkata ` 60,000, Delhi ` 80,000
(ii) Cash sent to Delhi ` 60,000, Kolkata ` 28,000

(C) Chennai Branch (Apart from the above):
(i) Received goods from Kolkata `1,20,000
(ii) Acceptances and cash sent to Kolkata ` 80,000 and ` 40,000 respectively.
(D) Kolkata Branch (Apart from the above)
(i) Sent goods to Chennai ` 1,40,000
(ii) Paid cash to Chennai ` 60,000
(iii) Acceptances sent to Chennai ` 60,000
[May – 2017, 8 Marks]
Solution 1. Statement of Inter Branch Transaction Effects

Particulars Delhi Mumbai Chennai Kolkata
Delhi
Received Goods 2,00,000 (1,40,000) - (60,000)
Sent Goods (1,80,000) - 1,00,000 80,000
Received Bills Receivable 80,000 - (80,000) -
Sent Acceptance (1,40,000) 1,00,000 - 40,000
Mumbai
Received Goods (80,000) 1,40,000 - (60,000)
Sent Cash 60,000 (88,000) - 28,000
Chennai
Received Goods - - 1,20,000 (1,20,000)
Sent Cash and Acceptance - - (1,20,000) 1,20,000
Kolkata
Sent Goods 1,40,000 (1,40,000)
Sent Cash 60,000 (60,000)
Sent Acceptances 60,000 (60,000)
(60,000) 12,000 2,80,000 (2,32,000)
2. Journal Entry in the Books of Head office
Particulars Dr.(` ) Cr.(` )

Mumbai Branch A/c Dr. 12,000
Chennai Branch A/c Dr. 2,80,000
To Kolkata Branch A/c 2,32,000
(Being adjustment entry passed by HO for Inter Branch Transaction for
April)

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[A] Stock & Debtors Method

Dr. Nagpur Branch Debtors Account

Dr. Nagpur Branch Adjustment Account

Goods sent to Branch A/c

Branch P/L A/c

Branch Debtors A/c

Goods sent to Branch A/c

Solution Delhi Branch Stock Account

To P and L A/c (Net Profit) 35,400

Branch Cash A/c

Solution Branch Stock

Branch P/L A/c

Dr. (ii) Branch Stock Account Cr.

Dr. (v) Branch Adjustment Account Cr.

(i) Cost = 1,800

Profit (Loading) Cost

Branch P/L A/c

Cost – 150 Cost – 1050

Goods sent to Branch 30,000 Rent and Taxes 2,000

Solution Branch A/c

Particulars Amount Particulars Amount

Dr. (ii) Memo. Branch Debtors A/c. Cr.

Dr. (iii) Branch Petty Cash A/c. Cr.

Branch Trading and Profit & Loss A/c

Solution Bhivani Branch Account

Working Note: (1)

Branch Stock A/c

Branch Debtors A/c

Branch Cash A/c

Branch Adjustment A/c

Branch P/L A/c

Jan. ‘2013 Feb. ‘2013 March ‘2013

Branch Debtor A/c

Branch Adjustment A/c

Cash Sales 80,000

Rent paid for the period from 1.4.92 to 31.3.93 2,000

Solution Branch A/c

Particulars Amount Particulars Amount

Particulars Amount Particulars Amount

Branch Debtors A/c

Particulars Amount Particulars Amount

Branch Cash A/c

Particulars Amount Particulars Amount

Branch Stock A/c

Particulars Amount Particulars Amount

(1) Goods are invoiced to the branch at cost plus 20%.

Solution (i) Calculation of profit earned by the branch

During the month, Dibrugarh branch.

Solution Branch Stock Account

Solution Trading and Profit & Loss Account

Cost Cost Consume

Solution Calicut Branch Trading and Profit and Loss Account

(before making adjustment

Mangalore Branch Trading and Profit and Loss Account

To Chargeable Expenses 55,000 (including ` 8,000

Solution Trading & P/L A/c

To Net profit 9,130 620

Working Note Calculate Of Stock (Closing)

Less: Reduction for dealer (200×20%) 40

Calculation of G.P. = Sales × G.P. Ratio

Solution Trading and Profit and loss A/c of Beta Ltd.

Solution In the books of the Head Office