11.

BRANCH ACCOUNT

SUBJECT – Accounting Time – 2 Hrs.

BATCH – Inter CA MARKS - 70

TEST PAPER

Ans.1 In the books of Head Office – XYZ Company

Kolkata Branch Account (at invoice)
Particulars Amount Particulars Amount
(₹) (₹)
To Balance b/d By Stock reserve (opening) 6,000
Stock 30,000 By Remittances:
Debtors 18,000 Cash Sales 1,00,000
Cash in hand 800 Cash from Debtors 60,000 1,60,000
Furniture 3,000 By Goods sent to branch 32,000
(loading)
To Goods sent to branch 1,60,000 By Goods returned by branch 2,000
(Return to H.O)
To Goods returned by 400 By Balance c/d
branch (loading)
To Bank (expenses paid by Stock 28,000
H.O.)
Rent 1,800 Debtors 16,880
Salary 3,200 Cash (800-600) 200
Stationery & Printing 800 5,800 Furniture (3,000-300) 2,700
To Stock reserve (closing) 5,600
To Profit transferred to
General Profit & Loss A/c 24,180
2,47,780 2,47,780

Working Note:
Debtors Account
Particulars ₹ Particulars ₹
To Balance b/d 18,000 By Cash account 60,000
To Sales account (credit) 60,000 By Sales return account 960
By Discount allowed account 160
By Balance c/d 16,880
78,000 78,000
Note: It is assumed that goods returned by branch are at invoice price.

Ans.2 1. Branch Stock Account

Particulars ₹ Particulars ₹
To Goods sent to Branch A/c 60,000 By Branch Debtors A/c 58,000
To Branch Adjustment A/c 27,000 By Branch Bank A/c 17,000
(Ref.Br. Bank A/c)
By balance c/d
 - Stock in Transit
[(50,000 x 120%) – 54,000] 6,000
- Stock at Branch 6,000
Total 87,000 Total 87,000

2. Branch Debtors Account

Particulars ₹ Particulars ₹
To Branch Stock A/c 58,000 By Branch Bank A/c- Colln from 37,000
Debtors (b/f)
By Branch P&L A/c (Bad Debts) 200
By Balance c/d 20,800
Total 58,000 Total 58,000

3. Goods Sent to branch Account

Particulars ₹ Particulars ₹
To Branch Adjustment A/c 10,000 By Balance Stock Account 60,000
(Loading on Goods sent =
20
60,000 x 120)
To Purchases 50,000
Total 60,000 Total 60,000

4. Branch Bank Account

Receipts ₹ Payment ₹
To Bank A/c – Receipt from HO 3,000 By Branch expenses A/c 12,000
To Branch debtors A/c – 37,000 By Bank A/c- Remittance to HO 43,000
Collection (Ref.Br. Debtors
A/c)
To Branch Stock A/c – Branch 17,000 By Balance c/d 2,000
Cash Sales (bal.fig.)
Total 57,000 Total 57,000

5. Branch Adjustment Account

Particulars ₹ Particulars ₹
To Branch P&L A/c- Gross 35,000 By Goods Sent to Branch – 10,000
Profit (bal.fig.) Loading
To Stock Reserve on Clg Stk 2,000 By Branch Sales A/c 27,000
20
(12,000 x )
120
Total 37,000 Total 37,000

6. Branch Profit and Loss Account

Particulars ₹ Particulars ₹
To Branch Debtors A/c (Bad 200 By Branch Adjustment A/c 35,000
Debts)
 To Branch Expenses A/c 12,000
To Net Profit (bal.fig.) 22,800
Total 35,000 Total 35,000

Ans.3 1. Branch Stock Account

Particulars ₹ Particulars ₹
To Balance b/d 80,000 By Branch Cash/Debtors 12,19,000
To Goods Sent to Branch 12,00,000 By Loss in Transit 15,000
BY Pilferage 6,000
By Balance c/d 40,000
Total 12,80,000 Total 12,80,000

2. Goods sent to Branch Account

Particulars ₹ Particulars ₹
To Balance Adjustment 3,000 By Stock Reserve on Opg 16,000
25 25
A/c (15,000 x 125) Stk (80,000 x 125)
To Pilferage – Loading 1,200 By Goods Sent to Branch 2,40,000
25
(6,000 x 125) A/c
To Branch P&L A/c 2,43,800
(bal.fig)
To Stock Reserve on Clg 8,000
25
Stk (40,000 x 125)
Total 12,00,000 Total 12,00,000

3. Branch Adjustment Account

Particulars ₹ Particulars ₹
To Loss in Transit – Loading 3,000 By Stock Reserve on Opg 16,000
25 25
(15,000 x 125) Stk (80,000 x 125)
To Pilferage – Loading 1,200 By Goods Sent to Branch 2,40,000
25
(6,000 x 125) A/c
To Branch P&L A/c (bal.fig) 2,43,800
To Stock Reserve on Clg Stk 8,000
25
(40,000 x 125)
Total 2,56,000 Total 2,56,000

4. Branch Profit and Loss Account

Particulars ₹ Particulars ₹
To Expenses 60,000 By Branch Adjustment A/c 2,43,800
To Loss in transit 12,000 (Gross Profit)
Less: Insurance Cover (10,000) 2,000
To Pilferage (Cost) 4,800
To General P&L A/c 1,77,000
 (Profit transferred)
Total 2,43,800 Total 2,43,800
Working Notes:
Computation of Loss on Pilfered Goods and Goods lost in Transit
Particulars Loss in Pilfered
Transit Goods
Value of Goods Lost 15,000 6,000
Less: Loading adjusted in Branch Adjustment A/c (3,000) (1,200)
at 20% of Value of Goods
Cost of Loss in Transit 12,000 4,800
Less: Amount of Insurance Claim (10,000) -
2,000 4,800

Ans.4 (i) Journal Entries

In the Books of KANPUR BRANCH (₹ in lacs.)
Particulars Dr. Cr.
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 2000)
Expenses A/c Dr. 1
To Head Office A/c 1
(Amount charged by head office for centralized
services)

(ii) Trading and Profit & Loss Account of the Branch for the year ended 31 st March,
2000
Particulars ₹ in Particulars ₹ in lacs
lacs
To Opening Stock 60 By Sales 360
To Goods received from By Closing stock 62
Head Office 288
Less: Returns 5 283
To Carriage Inwards 7
To Gross Profit c/d 72
422 422
To Salaries 25 By Gross Profit b/d 72
To Depreciation on Furniture 2
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
H.O. A/c 24
72 72

Balance Sheet as on 31st March, 2000

Liabilities ₹ In Assets ₹In
Lacs Lacs
Head Office 80 Furniture & equipment 20
Add: Goods in transit 10 Less: Dep. 2 18
Head Office expenses 1 Stock in Hand 62
Net Profit 24 115 Goods in Transit 10
Outstanding expenses 3 Debtors 20
Cash at Bank and in Hand 8
118 118

(ii) Books of Head Office

Journal Entries
(₹in Lacs)
Particulars ₹ ₹
Branch Trading Account Dr. 335
To Branch Account 355
(Being incorporation of the following debit items of
branch trail balance:- opening stock 60, goods
received from Head Office 288, Carriage Inwards 7)
Branch Account Dr. 427
To Branch Trading Account 427
(Being incorporation of the following credit items of
branch trial balance: Sales 360, closing stock 62,
goods returns to H. 0.5)
Branch Trading Account Dr. 72
To Branch Profit & Loss Account 72
(Being Gross profit earned by branch credited to
Branch Profit & Loss Account)
Branch Profit & Loss Account Dr. 48
To Branch Account 48
(Being incorporation of the following debit items of
branch trial balance: Salaries – 25, Rent-10,
Advertising-6, Telephone, Postage & Stationery-3,
Sundry office expenses-₹, Depreciation on furniture &
equipment-2)
Branch Profit & Loss Account Dr. 24
To Profit & Loss Account 24
(Being Net Profit at branch credited to (general)
profit & loss A/c)
 Branch A/c Dr. 3
To Branch Outstanding Expenses A/c 3
(Being incorporation of Branch Outstanding Expenses
in H.O. books)
Branch Furniture & Equipment A/c Dr. 18
Branch Stock A/c Dr. 62
Branch Debtors A/c Dr. 20
Branch Cash at Bank and in Hand A/c Dr. 8
Goods in Transit A/c Dr. 10
To Branch A/c 118
(Incorporation of different assets at the branch in
H.O. books.)

Ans.5 Books of Branch Journal Entries

Amount ₹
Dr. Cr.
(i) Head Office Account Dr. 5,000
To Salaries Account 5,000
(Being rectification of salary paid on
behalf of Head Office)
(ii) No entry in Branch Books is required.
(iii) Depreciation A/c Dr. 15,000
To Head Office Account 15,000
(Being depreciation of assets
accounted for)
(iv) Expenses Account Dr. 75,000
To Head Office Account 75,000
(Being allocated expenses of Head
Office recorded)
(v) Head Office Account Dr. 60,000
To Debtors Account 60,000
(Being adjustment entry for collection
from branch debtors directly by Head
office)
(vi) Goods in-transit Account Dr. 50,000
To Head Office Account 50,000
(Being goods sent by Head Office still
in-transit)
(vii) Head Office Account A/c Dr. 10,000
To Expenses Account 10,000
(Being expenditure incurred, wrongly
recorded in books)
(viii) Purchases Account A/c Dr. 16,000
To Head Office Account 16,000
(Being purchases booked)
Ans.6
(i) Trial Balance of London Branch as on 31st March, 2009
Particulars U.K. Rate per Dr. (₹) Cr.(₹)
Pound U.K.
Pound
Fixed assets 24,000 70 16,80,000
st
Stock (as on 1 April, 2008) 11,200 76 8,51,200
Goods from head office 64,000 - 49,26,000
Sales 96,000 75 72,00,000
Purchases 12,000 75 9,00,000
Expenses (4,800 + 400 – 200) 5,000 75 3,75,000
Debtors 4,800 77 3,69,600 2,46,400
Creditors 3,200 77 30,800
Outstanding expenses 400 77
Prepaid expenses 200 77
Cash at bank 1,200 77 15,400
Head office account - 92,400 17,20,000
Difference in foreign
exchange translation 12,400
92,09,600 92,09,600

Closing Stock will be (£ 8,000 x ₹ 77) = ₹ 6,16,000

(ii) Trading and Profit & Loss Account

For the year ended 31st March, 2009
Particulars Amount Particulars Amount
(₹) (₹)
To Opening stock 8,51,200 By Sales 72,00,000
To Purchases 9,00,000 By Closing stock 6,16,000
To Goods from head 49,26,000
office
To Gross profit 11,38,800
78,16,000 78,16,000
To Expenses 3,75,000 By Gross profit 11,38,800
To Depreciation 1,68,000 By Profit due to foreign
To Net Profit 6,08,200 exchange difference 12,400
11,51,200 11,51,200

(iii) Balance Sheet as on 31st March, 2008

Liabilities ₹ Assets ₹
Head office Fixed Assets
Less: Depreciation 1,68,000 15,12,000
Balance 17,20,000
Add: Net profit 6,08,200 23,28,200 Debtors 3,69,600
 Outstanding expenses 30,800 Prepaid expenses 15,400
Creditors 2,46,400 Closing stock 6,16,000
Cash at bank 92,400
26,05,400 26,05,400

Ans.7
Journal Entries in the books of H.O.
Date Particulars Dr.(₹) Cr.(₹)
30th April, 2017 Mumbai Branch A/c 12,000
Chennai Branch A/c 2,80,000
To Delhi Branch A/c 60,000
To Kolkata Branch A/c 2,32,000
(Being Adjustment entry passed
by H.O. in respect of inter-branch
transaction for the month of
April, 2017)

Working Note:
Inter Branch Transactions
Delhi (₹) Mumbai(₹) Chennai (₹) Kolkata (₹)
A. Delhi Branch:
1. Received Goods 2,00,000(Dr.) 1,40,000(Cr.) - 60,000(Cr.)
2. Sent Goods 1,80,000(Cr.) - 1,00,000(Dr.) 80,000(Dr.)
3. Received B/R 80,000(Dr.) - 80,000(Cr.) -
4. Send Acceptance 1,40,000(Cr.) 1,00,000(Dr.) - 40,000(Dr.)
B. Mumbai Branch:
5. Received Goods 80,000(Cr.) 1,40,000(Dr.) - 60,000(Cr.)
6. Sent Cash 60,000(Dr.) 88,000(Cr.) - 28,000(Dr.)
C. Chennai Branch:
7.Received Goods 1,20,000(Dr.) 1,20,000(Cr.)
8. Sent Cash & 1,20,000(Cr.) 1,20,000(Dr.)
acceptance
D. Kolkata Branch:
9. Send Goods 1,40,000(Dr.) 1,40,000(Cr.)
10. Sent Cash 60,000(Dr.) 60,000(Cr.)
11. Sent Acceptance 60,000(Dr.) 60,000(Cr.)
60,000(Cr.) 12,000(Dr.) 2,80,000(Dr.) 2,32,000(Dr.)