Branch Accounts

Problem no. 1 A Head Office in Nagpur supplies goods to its branch at Wardha at cost. The branch sells the goods for only cash and remits the proceeds to the Head Office promptly. The branch expenses being met by the Head Office by cheque. The following are the transactions relating to the branch for the year ended 31st Dec 2005: Stock at branch on 1-1-2005 12000 Petty cash at branch on 1-1-2005 400 Goods sent to branch during the year 55000 Goods returned by branch 500 Cheque sent by Head Office towards branch expenses: Salaries 2400 Insurance 600 Rent 800 Petty expenses 1000 4800 Stock at branch on 31-12-2005 8000 Petty cash at branch on 31-12-2005 200 Cash sales 75000 From the above information pass the necessary journal entries and prepare Wardha branch account in the books of the Head Office. Problem no. 2 Assuming that the goods are sent to the branch at cost, cash collected by branch is remitted to the H.O. and expenses are paid by cheque from H.O. Prepare branch account from the following particulars showing the working properly: Opening Stock at branch 60000 Goods sent to branch 180000 Cash sales 240000 Closing stock could not be ascertained, but it is known that the branch usually sells at cost plus 20%. The branch manager is entitled to a commission of 5% on the profit (before charging such commission) in addition to yearly salary to Rs. 12000. Other expenses of the branch are Rs.16000. Problem 3 M/s P & A Chandrapur has a branch at Warora. Head Office sends goods to branch at cost price. The branch sells the goods for cash as well as on credit. Branch remits all the cash to the Head Office. All the expenses of the branch are paid by the Head Office. From the following information, prepare branch account and branch trading and P&L A/c in the books of Head Office Opening balances on 1-4-2008: Rs. Trade stock 19800 Debtors 15000 Petty Cash 42

Goods received from Head Office Goods returned to Head Office Cash sales Discount to debtors Gross Sales Rebate to debtors Cash received from debtors Cheque sent to branch for expenses: Salaries & Wages 3220 Rent Rates & Taxes 940 Petty Cash 480 Insurance 1640 Goods returned by debtors Bad Debts Closing Balance on 31-3-2009: Trade stock Debtors Petty Cash

70000 2000 43600 70 89200 640 48400

6280 800 1200 15800 9490 64

Problem 4 A Company makes purchases at the Head Office and sends the goods brought to the Branch Offices for sale, no stock being retained at the Head Office. The branch offices effect sales, keep their own Sales ledger, receive cash against the ledger accounts and pay in the whole of their cash receipt everyday to the Head Office. Branch Office expenses are paid from cash remitted by the Head Office to the branches for the purpose. From the following particulars, show: 1. The branch account in the Head Office books and 2. General profit & loss Account showing the net profit for the whole concern assuming that the Head Office expenses amounted to Rs. 15000. Amravati Bhandara (Rs.) (Rs.) Credit Sales 40500 39000 Return Inward 300 360 Allowance to customers 75 60 Cash received from Ledger Accounts 35700 36000 Cash Sales 21300 18750 Stock at the commencement, at cost 8100 7200 Stock at end, at cost 9300 8700 Debtors at commencement 18750 18000 Bad Debts 225 150 Goods bought by Head Office and supplied to Branches 31800 30900 Rents and taxes paid 1200 1050 Wages etc. 5700 5340 Problem 5

Prepare Arvi Branch Account in the books of Wardha Head Office from the following particulars: Stock on 1-1-2002 8000 Debtors on 1-1-2002 3000 Furniture on 1-1-2002 10000 Prepaid Insurance on 1-1-2002 2000 Petty Cash on 1-1-2002 800 Goods supplied to Branch 80000 Cash sent to Branch for expenses: Salaries 5000 Insurance 1500 Petty Cash 1000 7500 Outstanding wages on 31-12-2002 600 Outstanding wages in 1-1-2002 3200 Cash Sales 65000 Debtors made direct payment to Head Office 5000 Debtors made payment to Branch 4000 Debtors returned goods direct to Head Office 2500 Branch returned goods to Head Office 4000 Debtors on 31-12-2002 10000 Stock on 31-12-2002 8000 Credit Sales 25000 Goods returned by Debtors 3400 Discount allowed to Debtors 1200 Petty Expenses paid by Branch 500 Depreciation is to be charged on the Furniture by 10% p.a. Goods of Rs. 2000 were destroyed by fire and Insurance Company admitted the claim For Rs. 1500 only this amount is received from Insurance Company. Branch remitted necessary cash to Head Office. Problem 6: M/s. Renuka & Co. Ltd., Nagpur has a branch at Pulgaon and all the goods sent to the branch at cost price. Branch sales the goods for cash and for credit. All the expenses are paid by the Head Office. Branch keeps their Sales Ledger and Cash Book only. From the information given below you are required to prepare Branch Account and Profits & Loss Account for the year ended 31-12-2001 in the books of the Head Office. Rs. Stock on 1-1-2001 45000 Stock on 31-12-2001 50000 Debtors on 1-1-2001 18000 Goods sent to Branch 200000 Goods returned by Branch 6000 Gross Sales 250000 Cash Sales 160000 Bad Debts written off 300 Discount allowed to customers 500

Returns Inward Cash sent to Branch toward expenses: Managers Salary Rent Petty Cash Cash remitted by Branch during the year Petty Cash on 1-1-2001 Petty Cash on 31-12-2001

600 8000 4000 1400 13400 230000 300 500

The Branch Manager is entitled to a commission of 10% on the profit after charging such commission. Problem 7: Pratibha Agencies of Pune has a branch at Nagpur. Goods are invoiced to the branch at cost plus 20%. The expenses of the branch are paid from Pune and the branch keeps the sales journal and the Debtors Journal only. Following information supplied by the branch (a) Prepare Trading and P & L A/C of the branch for the year ended 31st March 2006 (b) Show the account of the branch as it would appear in the books of the Head Office: Rs. Credit Sales 20500 Cash Sales 8750 Opening Stock (at invoice price) 12000 Closing Stock (at invoice price) 9000 Receipt from Debtors 18950 Sundry Debtors on 31st March 2006 4580 Goods received from Head Office 15000 Expenses paid by the Head Office for the branch: Salaries & rent 4800 Petty cash 400 Petty cash with branch on 1st April 2005 20 st Petty cash with branch on 31 March 2006 25 The Branch Manager is entitled to a commission of 2% on credit sales.

Problem 8: Anil Company of Nagpur has a branch at Armori. Goods are sent by the Head Office at invoice price which is at a profit of 20% on invoice price. All expenses of the branch are paid by the Head Office. From the following particulars, prepare Branch Account in the books of the Head Office. Opening Balances: Rs. Stock at invoice price 24200 Petty Cash 200 Goods sent to Branch at invoice Price 60000 Expenses made by the H.O.: Rent 1200 Wages 2400 Salary 4800 8400 Remittances made to Head Office: Cash Sales 18300 Cash collected from debtors 44000 Goods returned by Branch at invoice price 1800 Credit Sales 44600 Balances at the end: Stock at invoice price 26000 Debtors 14000 Petty Cash 50 Problem 9: Pratibha Ltd. Nagpur started a branch at Gondia on 1st April 1996 to which goods were sent 20% above cost. The branch makes both credit and cash sales. Branch expenses are met by H.O. The branch does not maintain regular books of accounts and necessary accounts relating to branch are maintained in H.O. Following particulars are available for the year ended on 31st March1997:
Particulars Goods sent to branch at invoice price Goods received by branch till 31st March1997 at invoice price Credit sales for the year Debtors as on 31st March 1997 Bad debts Cash Sales Cash in Hand at branch on 31st March 97 Closing stock at branch at invoice price Branch expenses met by H.O. Wages 3000 Rent 8000 Petty Expenses 1000 Rs. 60000 54000 58000 20800 200 17000 2000 6000

12000

Show the following in the books of H.o.: 1. Branch Account

2. Branch Debtors Account 3. Branch Trading and P & L A/c. Problem10: From the following Particulars prepare a branch A/c, Branch Debtors A/c and Branch Trading and P & L A/c in H.O. books. Branch is invoices goods at selling price to have 20% profit on invoice value. Branch is allowed to sell on credit as well as cash. Branch manager is allowed 2% commission on remittances from branch debtors. All branch expenses are met by H.O. by sending required cheques. All the cash received by Branch is remitted to H.O.:
Particulars Branch Stock(1/1/93) (at invoice price) Branch Debtors (1/1/93) Goods sent to Branch (at invoice price) Cash received from Branch Credit Sales of Branch Discount Allowed to customers Total Sales of Branch Branch Stock(31/12/93) (at invoice price) Branch Debtors (31/12/93) Branch Expenses paid by H.O. Rs. 80000 40000 380000 573400 250000 1600 560000 30000 25000 48200

Problem 11: Nagpur Traders have their H.O. at Nagpur and a Branch at Chandrapur. The branch is allowed to sell goods sent to them by H.O. on credit as well as on cash. All cash collection are paid in the bank in H.O. A/c. and cheques are sent to branch to meet its expenses. Goods are sent to Branch at invoice price so as to realize 20% profit on cost. Prepare the following A/c in the books of Nagpur H.O: 1. Branch Account 2. Branch Debtors Account 3. Branch Trading and P & L A/c.
Particulars Opening balances with branch (1/1/90): Goods Debtors Petty Cash Closing balances with branch (31/12/90): Goods Debtors Petty Cash Checks sent to Branch for: Salaries Rent Petty Cash Goods sent to Branch Total sales of branch Cash sales of Branch Rs. 24000 26000 120 30000 23000 150 24000 18000 2600 330000 360000 185000

Furniture with the Branch, the account of which is maintained by H.O. Rs. 40000

Depreciation @ 15% p.a. is to be charged on it. The branch is to be given a debit @ 1 % of total sales for administrative expenses. The branch allowed discount of Rs, 3000 to its customers and interest of Rs, 1500 is charged on them. Problem 12: Grihlaxmi Company Akola started a branch at Hinganghat on 1/1/98. Goods are sent to branch at cost + 25%. Branch keeps its own sales ledger. All expenses of the branch are paid by the H.O. and all cash collected by the branch is remitted daily to the H.O. From the following information Prepare Branch A/c. and Trading and P&L Account for the year ended 31/12/98 in the books of H.O.
Particulars Goods sent to Branch at invoice price Cheques sent to branch for expenses Discount allowed to debtors Bad Debts written off Total Sales Cash Sales Goods Returned by customers at selling price Cash remitted to H.O. Branch stock, on 31/12/98 Petty Cash with Branch at the end of the year Rs. 66600 10800 75 120 49500 31500 750 45750 17700 450

Problem 13: M/s Sarda oil Industries, Nagpur is having a branch at Chandrapur. Goods are supplied to the branch at 20% profit on sales. The branch has been instructed to send all the cash daily to the H.O. All expenses are paid by the H.O. except petty expenses which are met by the branch manager. From the following particulars prepare branch A/c in the books of H. O.:Particulars Stock on 1-1-88 Sundry debtors on 1-1-88 Cash in hand on 1-1-88 Office furniture on 1-1-88 Goods invoiced from the H.O. Goods returned to H.O. Goods returned by debtors Cash received from debtors Cash sales Credit sales Discount allowed to debtors Expenses paid by H.O. Rent Salary Printing & stationary Petty expenses paid by branch manager Stock at 31-12-88 Rs. 15000 9000 400 1200 80000 1000 480 30000 50000 30000 300 1200 2400 300 280 14000

Provide depreciation @10% on branch furniture.

Problem 14: The Chawla co. Ltd. Nagpur is having its branch at Amravati. Goods are invoiced to the branch at selling price which is cost plus 25%. Branch has been instructed to send all the cash daily to the H.O. All expenses are paid by the H.O. except petty expenses which are met by the branch manager. From the following particulars prepare branch A/c in the books of H. O. :Particulars Stock on 1-1-81 Sundry debtors on 1-1-81 Transactions from 1-1-81 to 31-12-81:Goods sent to branch Expenses incurred by branch manager Cash sales Credit sales H.O. sent a cheque to the branch for purchase of safe Goods sent to branch were stolen Cash remitted to H.O. Furniture purchases by branch manager Expenses paid by the H.O. Goods returned by the customer Bad debts Discount allowed Goods returned by the branch Stock on 31-12-81 Debtors on 31-12-81 Rs. 10000 5600 72800 480 30000 43200 5200 3500 60000 2400 6560 1500 520 200 2500 12000 7200

Problem: 15 Santosh Traders opened a branch at Sagar on 1st July 2004. Goods are sent from the H.O. at cost plus 25%. From the following particulars prepare branch account in the books of H.O. for the half year period ending 31st December 2004.
Particulars Cheque sent to branch for Petty expenses Rent Advertisement Salaries Insurance (Upto 30th June 2005) Rs. 440 1200 800 4000 300 6740 8000 120000 61500 26000 20000 200 600 50 650 32500

Furniture purchased for the branch Goods sent to branch at invoice price Cash sales by the branch Credit sales during 6 months Cash received from debtors Discount Allowed to debtors Goods returned by debtors(at invoice price) Bad debts written off Petty expense paid by the branch(out of the cash received by it) Stock at invoice price(excluding stock received from debtors)on 31st Dec 2004

Petty cash balance on 31st Dec 200

440

Provide depreciation on furniture at 10% per annum. Petty Cash at branch is maintained on impressed system.

INDEPENDENT BRANCH
Problem 1: The Calcutta Toy Company Ltd has a branch office at Bombay. Show in the books of Bombay branch:a) Trading and Profit & Loss A/c b) H.O. A/c c) Balance Sheet Also prepare Bombay branch A/c in H.O. books. The Trial Balance is given below: Bombay branch Trial Balance On31st Dec 2000
Particulars Motor car Furniture Sundry debtors and creditors Stock on 1-1-2000 Purchase from H.O. Sales Discount Received Cash in hand Rent, Rates & Taxes Sundry expenses Depreciation Carriage inwards H.O. A/c Salaries & wages Bad debts Remittances to H.O. Discount allowed Dr. Rs. 2750 720 10750 7500 28560 Cr. Rs.

2110

39750 190 1310 930 650 340 820 33850 3690 320 16800 760 75900

75900

Stock on 31st December 2000 Rs. 825 Problem 2: Branch A has sent following Trial Balance to Head Office:Particular Cash at Bank Cash in hand Sundry Debtors Purchases Dr. Rs. 49000 1140 74000 225000 Cr. Rs.

Rent & taxes General Expenses Salary Bad Debts Fixtures & fittings Plant Stock(1-1-94) Sundry Creditors Sales H.O.A/c

6000 9000 18000 960 3800 46000 98000 44600 340400 145900 530900

530900

Additional Information: 1. H.O. has to charge Rs. 6500 as proportionate supervision charges on the branch. 2. Fixed assets are to be depreciated by 10% 3. Branch Manager is to get commission at 15% on profit prior to charging commission. 4. Closing stock was Rs. 69500 5. Rs. 6000 remitted by branch to H.O. are in transit Prepare Branch Trading and Profit and Loss A/c for the year ended 31st December, 1994 and Balance sheet as on that date. Problem 3: A firm whose H.O. is in Pune has a Branch at Amravati, the branch keeps its own books and the following was the Trial balance of these books as on 31st December 2001:
Particulars Cash in hand Bank balance Stock(at cost)on 1-1-2001 Debtors & Creditors Remittance to H.O. H.O. current A/c Shop Fittings Motor Van Purchase by branch Goods From H.O. Sales Sales return Rent Salaries Motor expenses Trade expenses (Dr.) Rs. 200 7000 41000 35000 60000 3000 4000 80000 36000 183000 12000 5000 15000 2400 9600 310200 (Cr.)Rs.

12000 115200

310200

Additional Information: 1. The Branch Stock o 31st Dec 2001amounted at cost to Rs. 32000 2. Depreciation is to be provided at the rate of 5%p.a. on shop fittings and 20% p.a. on Motor Van 3. Rs. 2000 of H.O. salary are to be charged to the branch account for supervision 4. The branch manager is entitled to a commission of 1% of the net sales of the branch

5. Goods which cost Rs. 5000 had been forwarded by the H.O. to the branch on 31st Dec 2001.the transaction had been enter in the H.O. books but no record had been made in the branch books nor had the goods been taken into stock. Prepare to incorporate these transaction in the books of H.O.: a) Branch Trading and P& L A/c b) Branch A/c c) Balance sheet as on 31st Dec 2001 Problem 4: A Nagpur Merchant has a branch at Nanded. The ledger Balances of the Branch for the year ended 31-3-2002 were as follows:
Particulars Interest received Purchases Sales Goods from H.O. Creditors Sundry Expenses Bank(Dr.) H.O. current A/c. Machinery Stock(1-4-2001) Debtors Closing Stock Rs. 5000 18000 60000 28000 2400 800 6600 44000 20000 30000 8000 14000

You get the following information from the H.O. :1. The H.O. sent goods to branch Rs. 2000 on 30-3-2002, which the branch received on 3-42002 2. Branch furniture account stood in H.O. books at Rs. 1600. 3. Branch current account in H.O. books had a debit balance of Rs. 46000. Prepare Trading and P & L A/c and Balance Sheet in the branch books after depreciating furniture by 5% and machinery by 10%. Also give the branch Current A/c in H.O. books after posting incorporating entries to that Account. Problem 5: Madras H.O. has two branches, one in Bangalore and other at Cochin. The Branch keeps a complete set of books. On 31st Dec 2006 the Bangalore and Cochin Branch Accounts in H.O. Books showed debit balances of Rs. 67500 and Rs. 75000 respectively. From the following information pass the Journal entries and prepare Bangalore and Cochin branch account in the books of Madras H.O.: 1. Goods worth Rs. 7500 were transferred from Bangalore to Cochin under instruction from H.O. 2. Bangalore Branch paid Rs. 11250 for Priya Scooter purchased by H.O. in Bangalore. 3. Cochin Branch collected Rs. 6000 from a Cochin Customer of H.O. 4. Goods worth Rs. 14250 were sent by H.O. to Cochin branch on 23-12-2006 but the same was received by Cochin Branch on 6th Jan 2007.

5. The Bangalore Branch received on behalf of H.O. Rs. 2250 as dividend from Bangalore tyre company Bangalore 6. Rs. 9750 remitted by Bangalore Branch to Madras H.O. on 28-12-2006 but the same was received on 2-1-2007 7. Depreciation on furniture and Machinery in Bangalore and Cochin Branch were written off Rs.6000 and Rs. 7500 respectively 8. For the year 2006 the Bangalore Branch showed net profit of Rs. 12750 and Cochin Branch a net loss of Rs. 7500. Problem 6: A firm in Mumbai has two branches, one at Nagpur and the other at Bhandara. The branches keep a complete set of books. On 31-12-2000 the Nagpur and Bhandara Branch A/c in Mumbai books showed debit Balances of Rs. 55000and Rs. 48000 respectively before taking the following information into A/c: 1. Goods worth Rs. 2000 supplied by the H.O. to the Nagpur Branch on 25-12-200 was received by the latter on 2-1-2001 2. Remittances of Rs. 3500 made by Bhandara Branch to its H.O. on 30-12-2000 received by H.O. on 4-1-2001 3. Goods valued of Rs. 15000 were transferred from Nagpur Branch to The Bhandara branch under instruction from H.O. 4. Nagpur branch paid Rs. 6000 for a Machine purchased by H.O. in Nagpur 5. Provide depreciation at 10% on furniture (Rs. 15000) when Bhandara Branch furniture account is maintained in the H.O books. 6. Nagpur Branchy paid Rs. 500 interest to a bank at Nagpur on behalf of the H.O. 7. Nagpur Branch draws bills receivable for Rs. 3000 on Bhandara Branch which sent its acceptance. 8. Bhandara Branch collected Rs. 5000 from Bhandara Branch debtor on behalf of the H.O. 9. The H.O. charged to the Nagpur Branch with Rs. 600 for share in the administrative services rendered by H.O. 10. On 31-12-2000 the Nagpur Branch showed a net profit of Rs. 18000 and Bhandara Branch a net loss of Rs. 8000. Pass the necessary journal entries in the books of H.O. and both the branches. Also prepare branch account in the books of H.O.