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Question 1
X opened in 2013 a branch at Nagpur. It invoiced goods to the branch at cost plus 25%.
Information about 2013 and 2014 is given below. Prepare Branch Account for both the years.
2013 (₹) 2014 (₹)
Goods sent to branch (Invoice Price) 50,000 80,000
Cash sent to the Branch for expenses 8,000 10,000
Sales - Cash 22,000 33,000
- Credit 23,000 48,000
Cash received from debtors 20,000 47,000
Bad Debts written off 600 400
Stock on 31st December (invoice price) 4,800 4,000

Question 2
Fanna Cloth Mills opened a branch at Mumbai on 1st April, 2011. The goods were invoiced to the
branch at selling price which was 125% of the cost to the head office. The following are the
particulars of the transactions relating to branch during the year ended 31st March, 2012 :
₹ ₹
Goods sent to branch at cost to head office 42,12,600
Sales : Cash 18,76,050
: Credit 26,61,450 45,37,500
Cash collected from debtors 23,55,000
Discount allowed to debtors 23,550
Returns from debtors 15,000
Spoiled cloth in bales written off at invoice price 7,500
Cheques sent to branch for :
: Rent 1,08,000
: Salaries 2,70,000
: Other Expenses 52,500 4,30,500
Prepare Branch Account based on invoice price under Debtors method for ascertaining profit.

Question 3
Buckingham Bros, Bombay have a branch at Nagpur. They send goods at cost to their branch at
Nagpur. However, direct purchases are also made by the branch for which payments are made at
head office. All the daily collections are transferred from the branch to the head office. From the
following, prepare Nagpur branch account in the books of head office by Debtors method :

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₹ ₹
Opening balance (1-1-2012) Bad Debts 1,000
: Imprest Cash 2,000 Discount to Customers 2,000
: Sundry Debtors 25,000 Remittances to H.O. (recd. By HO) 1,65,000
: Stock : Transferred from H.O. 24,000 Remittances to H.O. (not recd. by 5,000
H.O. so far)
: Direct Purchases 16,000 Branch Exp. directly paid by H.O. 30,000
Cash Sales 45,000 Closing Balance (31-12-2012)
Credit Sales 1,30,000 : Stock : Direct Purchase 10,000
Direct Purchases 45,000 : Transfer from H.O. 15,000
Returns from Customers 3,000 : Debtors ?
Goods sent to branch from H.O. 60,000 : Imprest Cash ?
Transfer from H.O. for Petty 4,000
Cash Exp.

Question 4
From the information given in the Question 7, prepare Nagpur Branch Trading and Profit and Loss
Account in the books of head office.

Question 5
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 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 1.4.2012 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 5,000
the branch from cash sales and collection from debtors)
Depreciation to be provided on branch furniture & fixtures @ 10% p.a. on WDV basis.

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Question 6
Billo Ltd. Delhi has a branch in Chennai. Goods are invoiced to the branch at selling price designed
to produce a gross profit of 20% on sales. From the following data, prepare Chennai Branch
Account for year ended 31.3.16
Amount (₹)
Opening Balances as on 1st April
Branch Stock (At cost to HO) 20,000
Branch Debtors 17,000
Branch Cash 4,000
Computers 50,000
Transactions during the year
Credit sales at branch 1,75,000
Cash sales at branch 1,02,500
Goods returned to HO at selling price 12,500
Cash received from customers 1,57,300
Bills Receivable received from debtors at branch 10,000
Discounting of Bills stated above 9,800
Cash sent to branch for expenses 36,000
Actual cash expenses at branch 35,900
Shortage of stock at branch at selling price 150
Cash discount allowed to branch customers 780
Sale of one computer on 1 st
October 12,000
(Book Value on date of sale ₹ 18,000)
Closing Balances as on 31st March
Branch Stock (at cost to branch) 59,850
Branch Debtors ?
Branch Cash 9,000
Depreciation is to be provided on Computers at 20% p.a.
The manager is entitled to commission at 10% of profit of branch after charging such commission.

Question 7
X Ltd. sends goods to branch at sales price, which is made up of cost plus 25%. You are given
the following particulars:
Opening stock at branch (at cost to H.O.) 5,000
Goods sent to branch (at cost to Branch) 35,000
Loss in transit at invoice price 2,500
Theft of stock at invoice price 1,000
Loss in weight (normal at invoice price) 500
Sales 30,000
Expenses paid by H.O. 8,000

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Prepare Branch Account in the books of Head office to find out profit earned by the branch.

Question 8
From the following particulars relating to Pune branch for the year ending December 31, 2013,
prepare Branch Account in the books of Head office.
₹ ₹
Stock at Branch on January 1, 2013 10,000
Branch Debtors on January 1, 2013 4,000
Branch Debtors on Dec. 31, 2013 4,900
Petty cash at branch on January 1, 2013 500
Furniture at branch on January 1, 2013 2,000
Prepaid fire insurance premium on January 1, 2013 150
Salaries outstanding at branch on January 1, 2013 100
Good sent to Branch during the year 80,000
Cash Sales during the year 1,30,000
Credit Sales during the year 40,000
Cash received form debtors 35,000
Cash paid by the branch debtors directly to the Head Office 2,000
Discount allowed to debtors 100
Cash sent to branch for Expenses :
: Rent 2,000
: Salaries 2,400
: Petty Cash 1,000
: Insurance up to March 31, 2014 600 6,000
Goods returned by the Branch 1,000
Goods returned by the debtors 2,000
Stock on December 31,2013 5,000
Petty Cash spent by branch 850
Provide depreciation on furniture 10% p.a.
Goods costing ₹ 1,200 were destroyed on account of fire and a sum of ₹ 1,000 was received from
the Insurance Company.

Question 9
ROLTA LTD. with its Head Office at Mumbai has a Branch at Kolkata. The Branch receives all
goods from Head Office who also remits cash for all expenses. Sales are made by the Branch on
credit as well as for cash. Total sales by the Branch for the year ended 31st March, 2009
amounted to ₹5,60,000 out of which 20% is cash sales. The following further information is
relevant :
1.4.2008 31.3.2009
Stock in Trade 25,000 36,000

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Debtors 60,000 48,000

Petty Cash 120 180
Expenses actually incurred by the Branch during the year were :
₹
Salaries 36,000
Rent 12,000
Petty Expenses 5,600
All sales are made by the Branch at cost plus 25%. You are required to prepare the Kolkata
Branch Account in the Books of Head Office for the year ended 31st March, 2009.

Question 10
Widespread 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 of 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 Fittings 500
During the accounting year ended 31st March, 2013 the invoice price of goods dispatched by the
head office to the branch amounted to ₹ 1 crore 32 lakhs. 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 purchased 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 balance method. Prepare Branch Account in the books of head
office for the year ended 31st March, 2013.

Question 11
Harrison of Chennai has a branch at New Delhi to which goods are sent @ 20% above cost. The

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branch makes both cash and credit sales. Branch expenses are met partly from H.O. and partly by
the branch. The statement of expenses incurred by the branch every month is sent to head office
for recording. Following further details are given for the year ended 31st December, 2012 :
₹
Cost of goods sent to Branch at cost 2,00,000
Goods received by Branch till 31-12-2012 at invoice price 2,20,000
Credit Sales for the year at invoice price 1,65,000
Cash Sales for the year at invoice price 59,000
Cash Remitted to head office 2,22,500
Expenses paid by H.O. 12,000
Bad Debts written off 750

Balance as on 1-1-2012 31-12-2012

₹ ₹
Stock 25,000 (Cost) 28,000 (Invoice Price)
Debtors 32,750 26,000
Cash in Hand 5,000 2,500
Show necessary ledger accounts in the books of the head office and determine the Profit and Loss
of the Branch for the year ended 31st December, 2012 by Stock & Debtors method.

Question 12
Prepare Branch A/c as per Debtor’s method in Question 11.

Question 13
Hindustan Industries Mumbai has a branch in Cochin to which office goods are invoiced at cost plus
25%. The branch sells 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.
From the following details, relating to calendar year 2012, prepare the accounts in the Head
Office Ledger and ascertain the Branch Profit. Branch does not maintain any books of account, but
sends weekly returns to the Head Office :
₹
Goods received from Head Office at invoice price 6,00,000
Returns to Head Office at invoice price 12,000
Stock at Cochin as on 1st Jan., 2012 60,000
Sales in the year :
: Cash 2,00,000
: Credit 3,60,000
Sundry Debtors at Cochin as on 1st Jan. 2012 72,000
Cash received from Debtors 3,20,000
Discount allowed to Debtors 6,000

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Bad debts in the year 4,000

Sales returns at Cochin Branch 8,000
Rent, Rates, Taxes at Branch 18,000
Salaries, Wages, Bonus at Branch 60,000
Office Expenses 6,000
Stock at Branch on 31st Dec. 2012 at invoice price 1,20,000
Prepare Branch accounts in books of head office by Stock and debtors method.

Question 14
Mr. X, a cloth trader of Kolkata opened a Branch at Kanpur on 1–4–2010. The goods were sent
by Head Office to the Branch and invoiced at selling price to the Branch, which is 25% of the cost
price of Head Office.
The following are the particulars relating to the transactions of the Kanpur Branch :
Goods sent to Branch (at cost to H.O.) 4,50,000
Sales :
: Cash 2,10,000
: Credit 3,20,000
Cash collected from Debtors 2,85,000
Return from Debtors 10,000
Discount Allowed 8,500
Cash sent to Branch
: for freight 30,000
: for salaries 8,000
: for other expenses 12,000 50,000
Spoiled clothes written off at invoice price 10,000
Normal loss estimated at 15,000
Prepare Branch Stock Account, Branch Debtors Account and Branch Adjustment Account showing
the net profit of the Branch.

Question 15
Concept, with its Head Office at Mumbai has a branch at Nagpur. Goods are invoiced to the
Branch at cost plus 33-1/3%. The following information is given in respect of the branch for the
year ended 31st March, 2013 :
₹
Goods sent to Branch (Invoice price) 4,80,000
Stock at Branch on 1.4.2012 (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 1.4.2012 30,000

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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 31.3.2013 (Invoice price) 48,000
Branch debtors balance on 31.3.2013 36,500
Prepare, under Stock & 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.

Question 16
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 price 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 A/c for ascertaining Branch profit.

Question 17
Alpha Ltd. has a retail shop under the supervision of a manager. The ratio of gross profit to
selling price is constant at 25 per cent throughout the year to 31st March, 2015. Branch
manager is entitled to a commission of 10 per cent of the profit earned by his branch, calculated
before charging his commission but subject to a deduction from such commission equal in 25 per
cent of any ascertained deficiency of branch stock. All goods were supplied to the branch in head

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office.
From the under mentioned figures, calculate the commission due to manager for the year end 31st
March, 2015.
₹ ₹
Opening Stock (at cost) 74,736 Chargeable expenses 49,120
Goods sent to branch (at cost) 2,89,680 Closing Stock (Selling Price) 1,23,328
Sales 3,61,280
Manager’s commission paid on account 2,400

Question 18
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 Mar 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 the three months ended on that date.

Question 19
Arnold of Delhi, trades in Ghee and Oil. It has a branch at Lucknow. He dispatches 25 tins of Oil
@ ₹ 1,000 per tin and 15 tins of Ghee @ ₹ 1,500 per tin on 1st of every month. The branch
incurs some expenditure which is met out of its collections; this is in addition to expenditure
directly paid by Head Office. Following are the other details :
Delhi Lucknow
₹ ₹
Purchases Ghee 14,75,000 -
Oil 29,32,000 -
Direct Expenses 3,83,275 -
Expenses paid by H.O. - 14,250
Sales Ghee 18,46,350 3,42,750
Oil 27,41,250 3,15,730
Collection during the year (including Cash Sales) - 6,47,330
Remittance by Branch to Head Office - 6,13,250

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Delhi
Balance as on : 01-01-2012 31-12-2012
Stock :
: Ghee 1,50,000 3,12,500
: Oil 3,50,000 4,17,250
Debtors 7,32,750 -
Cash in Hand 70,520 55,250
Furniture & Fittings 21,500 19,350
Plant/ Machinery 3,07,250 7,73,500

Lucknow
Balance as on : 01-01-2012 31-12-2012
Stock :
: Ghee 17,000 13,250
: Oil 27,000 44,750
Debtors 75,750 -
Cash on Hand 7,540 12,350
Furniture & Fittings 6,250 5,625
Plant/ Machinery - -
- Addition to Plant/ Machinery on 1-1-2012 ₹ 6,02,750.
- Rate of Depreciation : Furniture & Fittings @ 10% and Plant/ Machinery @ 15% (already
adjusted in the above figures).
- The Branch Manager is entitled to 10% commission after charging such commission whereas,
the General Manager is entitled to 10% commission on overall company profits after charging
such commission.
- General Manager is also entitled to a salary of ₹ 2,000 p.m.
- General expenses incurred by H.O. ₹ 24,000.
Prepare Branch Account in the head office books and also prepare the Arnold’s Trading and Profit
and Loss A/c (excluding branch transactions).

Question 20
Beta, 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 -

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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
You are required to prepare Trading and Profit and Loss Account of the head office and branch
for the year ended 31st March, 2013.

Question 21
Jhaveri Sons have their Head Office at Calcutta and a branch at Agra. The goods are sent to
Branch at 20% less than the list price which is cost plus 100%. From the following particulars
ascertain the profit made by the branch as well as the Head Office on wholesale basis :
Head Office (₹) Branch (₹)
Opening Stock (Cost/ Invoice Price) 40,000 20,000
Purchases 4,00,000 -
Expenses 60,000 12,000
Goods destroyed by accident at invoice price - 2,000
Sales at list Price 3,40,000 1,60,000
Goods sent to branch at invoice price 1,60,000 1,60,000

Question 22
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 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

Question 23
Goods worth ₹ 50,000 sent by head office but the branch has received till the closing date goods
for worth ₹ 40,000 only. Give journal entry in the books of H.O. and branch for goods in
transit.

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Question 24
Journalise the following transactions :
a) Goods worth ₹ 5,000 are supplied by Delhi Branch to Agra Branch under the instructions of
Head Office.
b) Delhi Branch draws a bill receivable for ₹ 4,000 on Agra Branch which sends its acceptance.
c) Delhi Branch received ₹ 1,000 from Agra Branch.
d) Goods worth ₹ 2,000 were returned by a customer of Agra Branch to Delhi Branch.
e) Agra Branch collected ₹ 2,000 from a customer of Delhi Branch.

Question 25
Show what journal entries would be passed by the Jaipur Head Office to record the following
transactions in their Books on 31st March, 2012, the closing date :
(a) A remittance of ₹ 35,000 made by Sikar Branch to Head Office on 29thMarch, 2012 and
received by the Head Office on 5th April, 2012.
(b) Goods of ₹ 63,000 sent by the Head Office to the Bikaner Branch on 28th March, 2012
and received by the later on 4th April, 2012.
(c) Sikar Branch paid ₹ 30,000 as salary to a visiting Head Office Official.

Question 26
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
earlier 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) H.O. 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.

Question 27
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.
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(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.

Question 28
Show adjustment Journal entry in the books of Head Office at the end of April, 2013 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 (apart 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 (apart 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.

Question 29
Ring Bell Ltd. Delhi has a Branch at Bombay where a separate set of books is used. The following
is the trial balance extracted on 31st December, 2012.
Head Office Trial Balance
₹ ₹
Share Capital (Authorised: 10,000 Equity Shares of ₹ 100 each):
Issued : 8,000 Equity Shares 8,00,000
Profit & Loss Account - 1-1-2012 25,310
General Reserve 1,00,000
Fixed Assets 5,30,000
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Stock 2,22,470
Debtors and Creditors 50,500 21,900
Profit for 2012 52,200
Cash Balance 62,730
Branch Current Account 1,33,710
9,99,410 9,99,410

Branch Trial Balance

₹ ₹
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 Account in the two sets of books is accounted
for as follows:
(a) Cash remitted by the Branch on 31st December, 2012, but received by the Head Office on
1st January 2013 - ₹ 3,000.
(b) Stock stolen in transit from Head Office and charged to Branch by the Head Office, but
not credited to Head Office in the Branch books as the Branch Manager declined to admit
any liability (not covered by insurance) - ₹ 1,700.
Give the Branch Current Account in Head Office books after incorporating Branch Trial Balance
through journal.

Question 30
On 31st March, 2013 Kanpur Branch submits the following Trial Balance to its Head Office at
Lucknow:
₹ in Lacs
Debit Balances
Furniture and Equipment 18
Depreciation on 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

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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 lac for centralized services for which the branch
has not passed the entry.
You are required to :
(i) Pass Journal Entries in the books of the Branch to make the necessary adjustments
(ii) Prepare Final Accounts of the Branch including Balance Sheet, and
(iii) Pass Journal Entries in the books of Head Office to incorporate whole of the Branch Trial
Balance.

Question 31
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 is designed to give a gross margin (i.e.,
selling price less cost of goods from H.O.) 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.O. (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

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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.O. 44,500
3,10,200 3,10,200 67,200 67,200
(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 :
a. there were no stock losses incurred at the H.O. or at the branch.
b. it is KP’s practice to value finished goods stock at the H.O. at factory cost.
c. 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.

Question 32
M/s Shah 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 Trial Balance as on 31.3.2013 :
H.O. Branch
₹ ₹ ₹ ₹
Capital 3,10,000
Drawings 55,000
Purchases 19,69,500

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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 account 3,89,800
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 H.O. was also similarly not received upto
31.3.13.
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.

Question 33
L Ltd. has its head office at Mumbai and two branches at Pune and Goa. The branches purchase
goods independently. The Pune branch makes a profit of 33-1/3% on cost which the Goa 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 unrealised profits:
Particulars Pune Branch Goa Branch
Opening Stock 40,000 30,000
Purchases (Including Inter Branch transfers) 2,00,000 2,50,000
Sales 2,80,000 2,95,625
Chargeable Expenses 15,000 27,500
Closing Stock 30,000 43,500
Office and Adm. Expenses 13,250 7,000
Selling and Distribution Expenses 15,000 10,000
Information:
(i) Opening stock at Pune Branch includes goods of ₹ 10,000 taken from Goa Branch.

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(ii) Opening stock at Goa Branch includes goods of ₹ 17,000 taken from Pune Branch at cost
to receiving branch.
(iii) The Pune Branch sales includes transfer of goods to Goa Branch at selling price ₹ 20,000.
(iv) The sales of Goa Branch include transfer of goods to Pune Branch at selling price ₹
15,000.
(v) Closing stock at Pune Branch includes goods received from Goa Branch ₹ 5,000.
(vi) Closing stock at Goa Branch includes goods of ₹ 4,000 received from Pune Branch.

Question 34
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 Sheet
was as follows :
Liabilities ₹ Assets ₹
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 :
₹ ₹
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 ₹ 6,400 Building Account (further 4,000
2,000) payment)
General Expenses 1,600 Discount earned 1,200
Fire Insurance (paid for one year) 3,200 Cash paid to Creditors 60,000
Remittance to H.O. 38,400 Cash in Hand 1,600
Cash at Bank 28,000
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.

Question 35
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.
H.O. Branch
₹ ₹ ₹ ₹
Share Capital 1,50,000

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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 693
(Note 2)
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
Notes :
1. Goods transferred from Head Office to the Branch are invoiced at cost plus 10% and both
Revenue Accounts have been prepared on the basis 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 to record the foregoing in the appropriate ledger accounts in both sets of books;

Question 36
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.
Goods from the Head Office are invoiced at selling prices to give a profit of 20% on the sale
price. The goods sent from the branch to Head Office are at cost. From the following, prepare
Branch Trading and Profit & Loss Account and Branch Assets Account in the Head Office Books.
Trial Balance of the Delhi Branch as on 31-12-20X1
Debit ₹ Credit ₹
Head office opening balance on 1-1-16 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 (H.O. goods at invoice 4,000 Sundry Creditors 3,000
prices)
Opening Stock of other goods 500
Salaries 7,000

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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, 20X1, were as under: Furniture ₹ 5,000; Sundry Debtors
₹ 9,500; Cash ₹ 1,000, Creditors ₹ 30,000. 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 per cent on branch assets.

Question 37
ABC Ltd. has head office at Delhi (India) and branch at New York (U.S.A). New York branch is
an integral foreign operation of ABC Ltd. New York branch furnishes you with its trial balance as
on 31st March, 2013 and the additional information given thereafter :
Dr. ($) Cr. ($)
Stock on 1st April, 2012 150
Purchases and sales 400 750
Sundry Debtors and creditors 200 150
Bills of exchange 60 120
Sundry expenses 540
Bank balance 210
Delhi head office A/c 540
The rates of exchange may be taken as follows :
- on 1.4.2012 @ ₹ 40 per US $
- on 31.3.2013 @ ₹ 42 per US $
- average exchange rate for the year @ ₹ 41 per US $.
New York branch account showed a debit balance of ₹ 22,190 on 31.3.2013 in Delhi books and
there were no items pending reconciliation.
You are asked to prepare trial balance of New York branch in ₹ in the books of ABC Ltd.

Question 38
On 31st March, 2012, the following ledger balances have been extracted from the books of
Washington branch office :
Ledger Accounts $
Building 180
Stock as on 1.4.2011 26
Cash and Bank Balances 57
Purchases 96
Sales 110

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Commission receipts 28
Debtors 46
Creditors 65
You are required to convert above Ledger balances into Indian Rupees.
Use the following rates of exchange :
₹ Per $
Opening rate 46
Closing rate 50
Average rate 48
For fixed assets 42

Question 39
M/s Carlin has head office at New York (U.S.A.) and branch at Mumbai (India). Mumbai branch is
an integral foreign operation of Carlin & Co. Mumbai branch furnishes you with its trial balance as
on 31st March, 2013 and the additional information given thereafter :
Dr. Cr.
Rupees 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 $ 6,000 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 :
a. on 1.4.2012 @ ₹ 40 per US $
b. on 31.3.2013 @ ₹ 42 per US $
c. average exchange rate for the year @ ₹ 41 per US $
d. conversion in $ shall be made upto two decimal accuracy.
Prepare in US dollars the revenue statement for the year ended 31st March, 2013 and the
balance sheet as on that date of Mumbai branch as would appear in the books of New York H.O.
of Carlin & Co.

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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 items pending reconciliation.

Question 40
DM Delhi has a branch in London which is an integral foreign operation of DM. At the end of the
year 31st March, 2011, the branch furnishes the following trial balance in U.K. Pound :
Dr. (Pound) Cr. (Pound)
Fixed assets (Acquired on 1st April, 2007) 24,000
Stock as on 1st April, 2010 11,200
Goods from head Office 64,000
Expenses 4,800
Debtors 4,800
Creditors 3,200
Cash at bank 1,200
Head Office Account 22,800
Purchases 12,000
Sales 96,000
1,22,000 1,22,000
In head office books, the branch account stood as shown below :
London Branch A/c
₹ ₹
To Balance b/d 20,10,000 By Bank 52,16,000
To Goods sent to branch 49,26,000 By Balance c/d 17,20,000
69,36,000 69,36,000
The following further information are given :
(a) Fixed assets are to be depreciated @ 10% p.a. on straight line basis.
(b) On 31st March, 2010 :
a. Expenses outstanding - £ 400
b. Prepaid expenses - £ 200
c. Closing stock - £ 8,000
(c) Rate of Exchange :
a. 1st April, 2007 - ₹ 70 to £ 1
b. 1st April, 2010 - ₹ 76 to £ 1
c. 31st March, 2011 - ₹ 77 to £ 1
d. Average - ₹ 75 to £ 1
You are required to prepare :
(1) Trial balance, incorporating adjustments of outstanding and prepaid expenses, converting
U.K. pound into Indian rupees.
(2) Trading and profit and loss account for the year ended 31st March, 2011 and Balance Sheet
as on that date of London branch as would appear in the books of Delhi head office of DM.

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Question 41
Moon Star has a branch at Verginia (USA). The Branch is a non-integral foreign operation of the
Moon Star.
The trial balance of the Branch as at 31st March, 2012 is as follows :
Particulars Dr. (US $) Cr. (US $)
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 is given :
(1) Salaries outstanding $ 400.
(2) Depreciate office equipment and furniture & fixtures @ 10% p.a. at written down value.
(3) The Head Office sent goods to Branch for ₹ 15,80,000.
(4) The Head Office shows 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) Trial balance incorporating adjustments 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 Moon Star for the purpose of incorporating in the main Balance Sheet.

Question 42
On 31st December, 2012 the following balances appeared in the books of Chennai Branch of an

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English firm having its HO office in New York :

Amount (In ₹) Amount (In ₹)
Stock on 1st Jan., 2012 2,34,000
Purchases and Sales 15,62,500 23,43,750
Debtors and Creditors 7,65,000 5,10,000
Bills Receivable and Payable 2,04,000 1,78,500
Salaries and Wages 1,00,000 -
Rent, Rates and Taxes 1,06,250 -
Furniture 91,000 -
Bank A/c 5,68,650 -
New York Account - 5,99,150
36,31,400 36,31,400
Stock on 31st December, 2012 was ₹ 6,37,500.
Branch account in New York books showed a debit balance of $ 13,400 on 31st December, 2012
and Furniture appeared in the Head Office books at $ 1,750.
The rate of exchange for 1 $ on 31st December, 2011 was ₹ 52 and on 31st December, 2012 was
₹ 51. The average rate for the year was ₹ 50.
Prepare in the Head Office books, the Profit and Loss A/c and the Balance Sheet of Branch
assuming IFO.

Question 43
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 of 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

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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. You are required to :
(i) Prepare the Branch Trading & Profit & 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.

Question 44
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 (₹ ‘000) New York ($ ‘000)
Debit Credit Debit Credit
Share Capital 1,250
Reserves 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 (01-04-2012) 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
Total 5,600 5,600 280 280

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The following information is also available :

(1) Stock as at 31-03-2013
a. Delhi - ₹ 2,00,000
b. 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 :
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.

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