1

BRANCH ACCOUNTING
Solution 1
(a) Debtors Method
Branch Account
Particulars Amount Particulars Amount
To Balance b/d By Bank (Remittances)
Stock 7,000 Cash Sales 17,500
Debtors 12,600 Collection from Debtors 28,500 46,000
Petty Cash 200 By Goods returned to H.O. 1,000
To Goods sent to Branch 26,000
To Bank By Balance c/d
Salaries & Wages 6,200 Stock 6,500
Rent & Rates 1,200 Debtors 9,800
Sundry expenses 800 Petty Cash 100
To Net Profit (Bal. Fig.) 9,400
63,400 63,400
(b) Trading and P&L A/c Method
Memorandum Branch Trading and P & L A/c
Particulars Amount Particulars Amount
To Opening stock 7,000 By Sales:
To Goods sent 26,000 Cash 17,500
(-) Returns (1,000) 25,000 Credit 28,400
( - ) Sales Return (500) 45,400
To Gross Profit (Bal. Fig.) 19,900 By Closing stock 6,500
51,900 51,900
To Bad debts 600 By Gross Profit 19,900
To Salaries & Wages 6,200
To Rent & Rates 1,200
To Sundry expenses 800
To Discount 1,400
To Allowance to customers 200
To Petty expenses (200-100) 100
To Net Profit (Bal. Fig.) 9,400
19,900 19,900

(c) Stock & Debtors Method

Branch Stock Account
Particulars Amount Particulars Amount
To Balance b/d 7,000 By Goods sent to branch (returns) 1,000
To Goods sent to branch 26,000 By Bank (Cash Sales) 17,500
To Branch Debtors A/c (Returns) 500 By Branch Debtors A/c (Credit Sale) 28,400
To Branch P&L A/c 19,900 By Balance c/d 6,500
(Bal. Fig.: Gross Profit)
53,400 53,400
Branch Debtors Account
Particulars Amount Particulars Amount
To Balance b/d 12,600 By Branch stock A/c (Returns) 500
To Branch stock a/c 28,400 By Branch P&L A/c
(Credit Sales) Discount 1,400
Bad Debts 600
The copyright of these notes is with C.A. Nitin Goel
No part of these notes may be reproduced in any manner without his prior permission in writing
 2
Allowances 200 2,200
By Bank A/c (Collection) 28,500
By Balance c/d 9,800
41,000 41,000

Branch Expenses Account

Particulars Amount Particulars Amount
To Bank A/c By Branch P & L A/c ( Bal. Fig.) 8,300
Salaries & wages 6,200
Rent & rates 1,200
Sundry expenses 800 8,200
To Petty cash expense 100
(200-100)
8,300 8,300

Branch P & L Account

Particulars Amount Particulars Amount
To Branch Expenses A/c 8,300 By Branch Stock (Gross Profit) 19,900
To Branch Debtors A/c
Discount 1,400
Bad Debts 600
Allowances 200 2,200
To Net Profit (Bal. Fig.) 9,400
19,900 19,900

Solution 2
Branch Account
Particulars Amount Particulars Amount
To Balance b/d By Stock Reserve (Opening) 10,000
{40,000 * 25/100}
Stock 40,000 By Goods sent to branch (Loading) 45,000
{1,80,000 * 25/100}
Debtors 25,000 By Goods Returned to H.O. 6,000
Cash in hand 1,000 By Bank (Remittances)
Office furniture 4,000 Cash Sales 1,20,000
To Goods sent to branch 1,80,000 Collection from Debtors 65,000 1,85,000
To Goods returned to H.O. 1,500
(Loading) {6,000 * 25/100}
To Bank By Balance c/d
Salary 4,000 Stock 35,000
Staff welfare 750 Debtors (WN-1) 28,450
Telephone exp. 1,200 Cash (1,000 – 700) 300
To Stock Reserve (Closing) 8,750 Office furniture (4,000-10%) 3,600
{6,000 * 25/100}
To Net Profit (Bal. Fig.) 47,150
3,13,350 3,13,350
WN-1 Memorandum Debtors a/c
To Balance b/d 25,000 By Bank 65,000
To Credit Sales 70,000 By Discount allowed 300
By Sale Returns 1,250
By Balance c/d (Bal. Fig.) 28,450
95,000 95,000
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 3
Solution 3
Branch Account
Particulars Amount Particulars Amount
To Balance b/d By Stock Reserve (Opening) 6,000
{30,000 * 20/100}
Stock 30,000 By Goods sent to branch (Loading) 32,000
{1,60,000 * 20/100}
Debtors 18,000 By Goods Returned to H.O. 2,000
Cash in hand 800 By Bank (Remittances)
Office furniture 3,000 Cash Sales 1,00,000
To Goods sent to branch 1,60,000 Collection from Debtors 60,000 1,60,000
To Goods returned to H.O. 400
(Loading) {2,000 * 20/100}
To Bank: By Balance c/d
Rent 1,800 Stock 28,000
Salary 3,200 Debtors (WN-1) 16,880
Stationery & Printing 800 Cash in hand (800 - 600) 200
To Stock Reserve (Closing) 5,600 Office furniture (3,000 - 10%) 2,700
{28,000 * 20/100}
To Net Profit (Bal. Fig.) 24,180
2,47,780 2,47,780

WN-1
Memorandum Debtors a/c
To Balance b/d 18,000 By Bank 60,000
To Credit Sales 60,000 By Discount allowed 160
By Sale Returns 960
By Balance c/d (Bal. Fig) 16,880
78,000 78,000

Solution 4
Branch Account (On Cost Basis)
Particulars Amount Particulars Amount
To Balance b/d By Goods Returned to H.O. 24,000
[30,000  80%]
Stock [80,000 80%] 64,000 By Bank (Remittances)
Debtors 24,000 Cash Sales 3,10,000
Petty Cash 3,000 Collect from Debtors 3,58,000 6,68,000
To Goods sent to branch 6,72,000
(8,40,000  80%) By Balance c/d
To Bank (Cash sent for Petty exp.) 12,000 Stock (1,00,000  80%) 80,000
To Bank (Branch expenses) 20,000 Debtors (WN-1) 22,000
To Net Profit (Bal. Fig.) 4,000 Petty Cash 5,000
7,99,000 7,99,000
WN-1
Memorandum Debtors A/c
To Balance b/d 24,000 By Bank (Bal. Fig.) 3,58,000
To Credit Sales 3,60,000 By Bad debts 2,000
By Sale Returns 2,000
By Balance c/d 22,000
3,84,000 3,84,000
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 4
Solution 5
Salem Branch Account
Particulars Amount Particulars Amount
To Balance b/d By Bank (Remittance to HO) 19,50,000
Stock
Ghee 40,000 By Balance c/d
Oil 22,500 Stock
Debtors 1,80,000 Ghee 90,000
Cash in Hand 25,690 Oil 19,500
Furniture & Fittings 23,800 Debtors (W.N.-1) 2,10,000
To Goods sent to Branch Cash in Hand (W.N.-2) 44,800
Ghee (20*5,000*12) 12,00,000 Furniture & Fittings 21,420
Oil (30*1500*12) 5,40,000
To Bank (Expenses paid by HO) 76,800
To Net Profit (Bal.Fig.) 2,26,930
23,35,720 23,35,720

Trading and Profit and Loss account for the year ended 31st March, 2021
(Excluding branch transactions)
Particulars Amount Particulars Amount
To Opening stock By Sales:
Ghee 10,65,000 Ghee 38,40,500
Oil 44,000 Oil 24,10,000
To Purchases By Closing stock
Ghee 48,28,000 Ghee 15,70,000
-Goods Sent (12,00,000) 36,28,000 Oil 8,90,000
Oil 27,50,000
-Goods Sent (5,40,000) 22,10,000
To Direct Expenses 6,35,800
To Gross Profit (Bal. Fig.) 11,27,700
87,10,500 87,10,500
To Manager’s Salary 2,40,000 By Gross Profit 11,27,700
To General Expenses 1,86,000 By Branch Profit transferred 2,26,930
To Depreciation
Furniture (88,600-79,740) 8,860
Building (5,10,800+ 37,620
2,41,600-7,14,780)
To Manager’s Commission 80,195
(8,82,150*10/110)
To Net Profit (Bal. Fig.) 8,01,955
13,54,630 13,54,630
WN-1 Memorandum Debtors A/c
To Balance b/d 1,80,000 By Bank/Cash 20,15,000
To Sales By Balance c/d (Bal. Fig.) 2,10,000
Ghee 14,50,000
Oil 5,95,000
22,25,000 22,25,000
WN-2 Branch Cash a/c
To Balance b/d 25,690 By Remittance 19,50,000
To Collections 20,15,000 By Expenses 45,890
By Balance c/d (Bal. Fig.) 44,800
20,40,690 20,40,690
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 5
Note:
1) Branch managers generally get commission based on the Branch profits and not on overall
organizational profits. The answer given above is on the basis of the information given in the question
and the commission of branch manager is computed as 10% on overall organizational profits after
charging such commission.
2) Since the amount of cash sales was not given specifically in the question, total amount of cash
collections during the year amounting ₹ 20,15,000 has been considered as collection from Debtors in
the above solution.

Solution 6
Branch Account
Particulars Amount Particulars Amount
To Balance b/d By Stock Reserve (Opening) 5,000
{30,000 * 20/120}
Stock 30,000 By Goods sent to branch (Loading) 40,000
{2,40,000 * 20/120}
Debtors 32,750 By Bank (Remittances) 2,22,500
Cash in hand 5,000 By Balance c/d
To Goods sent to branch 2,40,000 Stock (including transit) 48,000
To Bank (Exp. Paid by HO) 12,000 Debtors 26,000
To Stock Reserve (Closing) 8,000 Cash in hand 2,500
{48,000 * 20/120}
To Net Profit (Bal. Fig.) 16,250
3,44,000 3,44,000

Solution 7
Branch Stock Account
Particulars Amount Particulars Amount
To Balance b/d 4,50,000 By Goods sent to branch (returns) 90,000
To Goods sent to branch 45,00,000 By Bank (Cash Sales) 15,00,000
To Branch Debtors A/c (Returns) 60,000 By Branch Debtors A/c (Credit Sale) 27,00,000
To Branch Adjustment A/c 1,80,000 By Balance c/d 9,00,000
(Bal. Fig.: Surplus)
51,90,000 51,90,000
Branch Adjustment Account
Particulars Amount Particulars Amount
To Goods sent to branch-Returns 18,000 By Stock Reserve (Opening stock) 90,000
(Loading) [90,000  20%] [4,50,000  20%]
To Stock Reserve (Closing stock) 1,80,000 By Goods sent to branch (Loading) 9,00,000
[9,00,000  20%] [45,00,000  20%]
To Branch P&L {G.P} (Bal. Fig) 9,72,000 By Branch Stock (Surplus) 1,80,000
11,70,000 11,70,000

Branch Expenses Account

Particulars Amount Particulars Amount
To Bank A/c By Branch P & L A/c ( Bal. Fig.) 6,30,000
Rent, rates & taxes 1,35,000
Office expenses 45,000
Salaries & wages 4,50,000 6,30,000
6,30,000 6,30,000

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 6
Branch P & L Account
Particulars Amount Particulars Amount
To Branch Expenses A/c 6,30,000 By Branch Adjustment (G.P.) 9,72,000
To Branch Debtors A/c
Discount 45,000
Bad Debts 30,000 75,000
To Net Profit (Bal. Fig.) 2,67,000
9,72,000 9,72,000
Goods Sent to Branch Account
Particulars Amount Particulars Amount
To Branch stock A/c 90,000 By Branch stock A/c 45,00,000
To Branch Adjustment A/c 9,00,000 By Branch Adjustment A/c 18,000
To Purchases (Bal. Fig.) 35,28,000
45,18,000 45,18,000
Branch Debtors Account
Particulars Amount Particulars Amount
To Balance b/d 5,40,000 By Branch stock A/c (Returns) 60,000
To Branch stock a/c 27,00,000 By Branch P&L A/c 75,000
(Credit Sales) (Discount & Bad debts)
By Bank A/c (Collection) 24,00,000
By Balance c/d (Bal. Fig.) 7,05,000
32,40,000 32,40,000
Note: The solution has been given on ‘Stock and Debtors Method’. As the question is silent on the
method to be adopted, an alternate solution is also possible

Solution 8
Branch Stock Account
Particulars Amount Particulars Amount
To Balance b/d 72,000 By Goods sent to branch (returns) 60,000
To Goods sent to branch 8,40,000 By Bank (Cash Sales) 1,85,000
To Branch Debtors A/c (Returns) 14,000 By Branch Debtors A/c (Credit Sale) 6,25,000
To Branch Adjustment A/c 94,000 By Balance c/d (1,25,000+20%) 1,50,000
(Bal. Fig.: Surplus)
10,20,000 10,20,000

Branch Adjustment Account

Particulars Amount Particulars Amount
To Goods sent to branch-Returns 10,000 By Stock Reserve (Opening stock) 12,000
(Loading) [60,000  20/120] [72,000  20/120]
To Stock Reserve (Closing stock) 25,000 By Goods sent to branch (Loading) 1,40,000
[1,50,000  20/120] [8,40,000  20/120]
To Branch P&L {G.P} (Bal. Fig) 2,11,000 By Branch Stock (Surplus) 94,000
2,46,000 2,46,000

Branch Expenses Account

Particulars Amount Particulars Amount
To Bank A/c By Branch P & L A/c ( Bal. Fig.) 1,05,200
Rent, rates & taxes 24,000
Office expenses 9,200
Salaries & wages 72,000 1,05,200
1,05,200 1,05,200
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 7
Branch P & L Account
Particulars Amount Particulars Amount
To Branch Expenses A/c 1,05,200 By Branch Adjustment (G.P.) 2,11,000
To Branch Debtors A/c By Bad Debts Recovered 1,000
Discount 7,500
Bad Debts 5,500 13,000
To Net Profit (Bal. Fig.) 93,800
2,12,000 2,12,000
Goods Sent to Branch Account
Particulars Amount Particulars Amount
To Branch stock A/c 60,000 By Branch stock A/c 8,40,000
To Branch Adjustment A/c 1,40,000 By Branch Adjustment A/c 10,000
To Purchases (Bal. Fig.) 6,50,000
8,50,000 8,50,000
Branch Debtors Account
Particulars Amount Particulars Amount
To Balance b/d 96,000 By Branch stock A/c (Returns) 14,000
To Branch stock a/c 6,25,000 By Branch P&L A/c 13,000
(Credit Sales) (Discount & Bad debts)
By Bank A/c (Collection) 4,38,000
By Balance c/d (Bal. Fig.) 2,56,000
7,21,000 7,21,000

Solution 9
Branch Stock Account
Particulars Amount Particulars Amount
To Balance b/d 24,000 By Goods sent to branch (returns) 2,000
To Goods sent to branch 70,000 By Bank (Cash Sales) 40,000
To Branch Debtors A/c (Returns) 1,200 By Branch Debtors A/c (Credit Sale) 42,000
By Shortage 800
By Balance c/d (Bal Fig.) 10,400
95,200 95,200

Branch Adjustment Account

Particulars Amount Particulars Amount
To Goods sent to branch-Returns 600 By Stock Reserve (Opening stock) 7,200
(Loading) [2,000  30%] [24,000  30%]
To Stock Reserve (Closing stock) 3,120 By Goods sent to branch (Loading) 21,000
[10,400  30%] [70,000  30%]
To Shortage (Loading) 240
[800  30%]
To Branch P&L {G.P} (Bal. Fig) 24,240
28,200 28,200

Branch Expenses Account

Particulars Amount Particulars Amount
To Bank A/c (expenses) 12,200 By Branch P & L A/c ( Bal. Fig.) 12,200
12,200 12,200

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 8
Branch P & L Account
Particulars Amount Particulars Amount
To Branch Expenses A/c 12,200 By Branch Adjustment (G.P.) 24,240
To Branch Debtors A/c
Discount 600
To Shortage (Cost)
[800  70%] 560
To Net Profit (Bal. Fig.) 10,880
24,240 24,240

Goods Sent to Branch Account

Particulars Amount Particulars Amount
To Branch stock A/c 2,000 By Branch stock A/c 70,000
To Branch Adjustment A/c 21,000 By Branch Adjustment A/c 600
To Purchases (Bal. Fig.) 47,600
70,600 70,600

Branch Debtors Account

Particulars Amount Particulars Amount
To Balance b/d 12,400 By Branch stock A/c (Returns) 1,200
To Branch stock A/c (Credit Sales) 42,000 By Branch P&L A/c (Discount) 600
By Bank A/c (Collection) 39,600
By Balance c/d (Bal. Fig.) 13,000
54,400 54,400

Solution 10
Branch Stock Account
Particulars Amount Particulars Amount
To Balance b/d 3,60,000 By Goods sent to branch (returns) 1,20,000
To Goods sent to branch 24,00,000 By Bank (Cash Sales) 21,60,000
To Surplus (Bal.Fig.) 36,000 By Branch Debtors A/c (Credit Sale) 1,20,000
By Goods Pilfered (Abnormal loss) 24,000
By Branch Adjustment (Normal Loss) 36,000
By Balance c/d
In Hand 2,88,000
In Transit 48,000
27,96,000 27,96,000

Branch Adjustment Account

Particulars Amount Particulars Amount
To Goods sent to branch-Returns 30,000 By Stock Reserve (Opening stock) 90,000
(Loading) [1,20,000  25%] [3,60,000  25%]
To Goods Pilfered (Loading on 6,000 By Goods sent to branch (Loading) 6,00,000
Abnormal Loss) [24,000  25%] [24,00,000  25%]
To Branch Stock A/c (Normal 36,000 By Surplus 36,000
Loss)
To Stock Reserve (Closing stock) 84,000
[3,36,000  25%]
To Branch P&L {G.P} (Bal. Fig) 5,70,000
7,26,000 7,26,000

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 9
Branch P & L Account
Particulars Amount Particulars Amount
To Goods Pilfered (Cost of 18,000 By Branch Adjustment (G.P.) 5,70,000
Abnormal Loss) [24,000  75%]
To Net Profit (Bal. Fig.) 5,52,000
5,70,000 5,70,000

Solution 11
Branch Stock Account
Particulars Amount Particulars Amount
To Balance b/d 31,200 By Bank (Cash Sales) 20,000
To Goods sent to branch 1,08,000 By Branch Debtors A/c (Credit Sale) 68,200
(72,000+50% of 72,000)
To Branch Debtors A/c (Returns) 3,000 By Balance c/d (Bal. Fig.) 54,600
To Surplus in stock 600
1,42,800 1,42,800

Branch Adjustment Account

Particulars Amount Particulars Amount
To Stock Reserve (Closing stock) 18,200 By Stock Reserve (Opening stock) 10,400
[54,600  1/3] [31,200  1/3]
By Goods sent to branch (Loading) 36,000
[1,08,000  1/3]
To Branch P&L {G.P} (Bal. Fig) 28,800 By Branch Stock (Surplus) 600
47,000 47,000

Branch Expenses Account

Particulars Amount Particulars Amount
To Bank A/c 13,400 By Branch P & L A/c ( Bal. Fig.) 13,400
13,400 13,400
Branch P & L Account
Particulars Amount Particulars Amount
To Branch Expenses A/c 13,400 By Branch Adjustment (G.P.) 28,800
To Branch Debtors A/c
Discount 700 700
To Net Profit (Bal. Fig.) 14,700
28,800 28,800
Goods Sent to Branch Account
Particulars Amount Particulars Amount
To Branch Adjustment A/c 36,000 By Branch stock A/c 1,08,000
To Purchases (Bal. Fig.) 72,000
1,08,000 1,08,000
Branch Debtors Account
Particulars Amount Particulars Amount
To Balance b/d 17,400 By Branch stock A/c (Returns) 3,000
To Branch stock a/c 68,200 By Branch P&L A/c 700
(Credit Sales) (Discount & Bad debts)
By Bank A/c (Collection) (Bal. Fig.) 67,600
By Balance c/d 14,300
85,600 85,600

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 10
Solution 12
Trading and P&L Account
Particulars H.O Branch Particulars H.O Branch
To Opening stock 50,000 - By Goods sent to branch 1,08,000 -
To Purchases 3,00,000 - By Sales 3,06,000 1,00,000
To Goods received from - 1,08,000 By Closing Stock 1,20,000 18,000
HO (WN-1 & 2)
To Gross Profit 1,84,000 10,000
5,34,000 1,18,000 5,34,000 1,18,000
To Expenses 90,000 4,000 By Gross Profit 1,84,000 10,000
To Stock Reserve (WN3) 8,000 -
To Net Profit (Bal. Fig.) 86,000 6,000
1,84,000 10,000 1,84,000 10,000
WN-1 Calculation of closing stock of Head Office
Opening Stock of Head Office 50,000
Goods purchased by Head Office 3,00,000
3,50,000
Less : Cost of goods sold [4,14,000 *100/180] (2,30,000)
Closing Stock 1,20,000
WN-2 Calculation of closing stock of Branch
Goods received from Head Office (At Invoice Value) 1,08,000
Less : Invoice value of goods sold [1,00,000 *180/200] (90,000)
Closing Stock 18,000
WN-3 Calculation of unrealized profit in branch stock:
Branch stock 18,000
Profit Included 80% of cost
Unrealized Profit 18,000 *80/180 = 8,000

Solution 13

Trading and P&L Account

Particulars H.O Branch Particulars H.O Branch
To Opening stock 1,25,000 - By Goods sent to branch 7,38,000 -
To Purchases 21,50,000 - By Sales 23,79,600 7,30,000
To Goods received from - 7,38,000 By Closing Stock 5,43,000 81,000
HO (WN-1 & 2)
To Gross Profit 13,85,600 73,000
36,60,600 8,11,000 36,60,600 8,11,000
To Office Expenses 50,000 4,500 By Gross Profit 13,85,600 73,000
To Selling Expenses 32,000 3,300
To Staff Salaries 45,000 8,000
To Stock Reserve (WN3) 36,000 -
To Net Profit (Bal. Fig.) 12,22,600 57,200
13,85,600 73,000 13,85,600 73,000

WN-1 Calculation of closing stock of Head Office

Opening Stock of Head Office 1,25,000
Goods purchased by Head Office 21,50,000
22,75,000
Less : Cost of goods sold [31,17,600 *100/180] (17,32,000)
Closing Stock 5,43,000

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 11
WN-2 Calculation of closing stock of Branch
Goods received from Head Office (At Invoice Value) 7,38,000
Less : Invoice value of goods sold [7,30,000 *180/200] (6,57,000)
Closing Stock 81,000

WN-3 Calculation of unrealized profit in branch stock:

Branch stock 81,000
Profit Included 80% of cost
Unrealized Profit 81,000 *80/180 = 36,000

Solution 14

Branch Stock Reserve in respect of unrealized profit

Opening stock [3,45,000 * 15/115] = 45,000
Closing Stock [2,30,000 * 15/115] = 30,000

WN-1 Calculation of closing stock at invoice price

Cost Price 100
Invoice Price 115
Sale Price 140
Opening Stock at Invoice Price 3,45,000
Goods received during the year at invoice price 16,10,000
Total 19,55,000
Less : Cost of goods sold at invoice price (17,25,000)
[21,00,000 *115/140]
Closing Stock 2,30,000

Solution 15
Trading and P&L Account
Particulars Amount Particulars Amount
To Opening Stock 2,20,000 By Sales 12,00,000
To Goods sent to branch 11,00,000 By Closing Stock (WN-1) 3,60,000
To Gross Profit
[12,00,000*30/150] 2,40,000
15,60,000 15,60,000
To Expenses 45,000 By Gross Profit 2,40,000
To Net Profit (Bal. Fig.) 1,95,000
2,40,000 2,40,000

Stock Reserve
Opening stock [2,20,000 * 20/120] = 36,667
Closing Stock [3,60,000 * 20/120] = 60,000
WN-1 Calculation of closing stock at invoice price
Cost Price 100
Invoice Price 120
Sale Price 150
Opening Stock at Invoice Price 2,20,000
Goods received during the year at invoice price 11,00,000
Total 13,20,000
Less : Cost of goods sold at invoice price (9,60,000)
[12,00,000 *120/150]
Closing Stock 3,60,000
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 12
Solution 16
The following journal entry must be made by the branch:
Date Particulars L.F. Dr. Amount Cr. Amount
31.03.2021 Goods in transit A/c Dr. 50,000
To Head office A/c 50,000
[Being Goods sent by Head office is still in
transit on the closing date]

Solution 17
Entries in the Books of Branch
S.No. Particulars L.F. Dr. Amount Cr. Amount
(a) Expenses A/c Dr. 1,35,000
To Head Office A/c 1,35,000
(Being expenses allocated to branch by Head Office)
(b) Depreciation A/c Dr. 1,15,000
To Head Office A/c 1,15,000
(Being depreciation of branch fixed assets, whose accounts
are kept by head office )
(c) Head Office A/c Dr. 1,40,000
To Salaries A/c 1,40,000
(Being rectification of entry for payment of salaries to head
office official wrongly debited to Salaries A/c)
(d) Head Office A/c Dr. 1,30,000
To Debtors A/c 1,30,000
(Being amount collected directly from a branch customer
on behalf of the branch by Head Office)
(e) No entry in the books of branch for remittance sent by
branch not received by Head Office till 31st March 2021
Note: In entry (e) the cash in transit entry will be passed in the Books of the Head Office.

Solution 18
Entries in the Books of Head Office
S.No. Particulars L.F. Dr. Amount Cr. Amount
(i) Loss of goods due to theft during transit Dr. 12,000
To Purchases A/c 12,000
(Being goods lost on account of theft during transit)
(ii) Salaries A/c Dr. 15,000
To Branch A/c 15,000
(Being salary paid by the branch for H.O. employee)
(iii) No entry in the books of head office for goods sent to
branch not received by branch till 31st March 2021
(iv) Cash in transit A/c Dr. 10,000
To Branch A/c 10,000
(Being remittance by branch not received by 31 Mar, 2021)
st

(v) Branch A/c Dr. 25,000

To Purchases A/c 25,000
(Being rectification of entry for payment for goods
purchased by branch wrongly debited to Purchase A/c)
(vi) Branch A/c Dr. 11,250
To Branch Fixed Asset (Shop) A/c 11,250
(Being depreciation of branch fixed assets, whose accounts
are kept by head office )
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 13
(vii) Branch A/c Dr. 5,600
To Expenses A/c 5,600
(Being expenses charged to the Branch for work done on its
behalf by the Head Office)

Note:
1. In entry (i), it is assumed that refusal of branch manager (to accept liability of stolen goods) is accepted
by the Head Office and no entry has been passed by HO when goods were sent.
2. In entry (iii) the goods in transit entry will be passed in the Books of the Branch.

Solution 19
Entries in the Books of Branch
S.No. Particulars L.F. Dr. Amount Cr. Amount
(a) Head Office A/c Dr. 24,000
To Salaries A/c 24,000
(Being the rectification of salary paid on behalf of H.O.)
(b) Expenses A/c Dr. 22,500
To Head Office A/c 22,500
(Being the allocated expenditure by the head office
recorded in branch books)
(c) Head Office A/c Dr. 50,000
To Debtors A/c 50,000
(Being the adjustment of collection from branch debtors)
(d) No entry in the books of branch for remittance sent by
branch not received by Head Office till end of year
Note: In entry (d) the cash in transit entry will be passed in the Books of the Head Office.

Solution 20
Entries in the Books of Branch
S.No. Particulars L.F. Dr. Amount Cr. Amount
(i) Head Office A/c Dr. 5,000
To Salaries A/c 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 A/c 15,000
(Being depreciation of assets accounted for)
(iv) Expenses A/c Dr. 75,000
To Head Office A/c 75,000
(Being allocated expenses of Head Office recorded)
(v) Head Office A/c Dr. 60,000
To Debtors A/c 60,000
(Being adjustment entry for collection from Branch
Debtors directly by Head Office)
(vi) Goods in transit A/c Dr. 50,000
To Head Office A/c 50,000
(Being goods sent by Head Office still in-transit)
(vii) Head Office A/c Dr. 10,000
To Expenses A/c 10,000
(Being expenditure incurred, wrongly recorded in books)
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 14
(viii) Purchases A/c Dr. 16,000
To Head Office A/c 16,000
(Being purchases booked)

Solution 21
Entries in the Books of Branch
S.No. Particulars L.F. Dr. Amount Cr. Amount
(i) Head Office A/c Dr. 5,000
To Salaries A/c 5,000
(Being rectification of salary paid on behalf of Head
Office)
Head Office A/c Dr. 25,000
(ii) To Cash/Bank/Liability A/c 25,000
(Being asset purchased and retained in HO books)
(iii) No entry in Branch Books is required.
(iv) Head Office A/c Dr. 25,000
To Debtors A/c 25,000
(Being adjustment entry for collection from Branch
Debtors directly by Head Office)
(v) Bank A/c /(Cash in Transit) A/c Dr. 5,000
To Head Office A/c 5,000
(Remittance of Funds by Head Office to Branch)

Solution 22
Journal Entry in the Books of Head Office
Date Particulars L.F. Dr. Amount Cr. Amount
31.01.2021 Madras Branch A/c Dr. 6,000
Patna Branch A/c Dr. 16,000
To Bombay Branch A/c 6,000
To Calcutta Branch A/c 16,000
(Being adjustment entry passed by head office
in respect of inter-branch transactions for the
month of January, 2021)

Working Note:
Inter – Branch transactions
Bombay Madras Calcutta Patna
A. Bombay Branch
(i) Received goods 10,000 (Dr.) 6,000 (Cr.) 4,000 (Cr.)
(ii) Sent goods 18,000 (Cr.) 8,000 (Dr.) 10,000 (Dr.)
(iii) Received B/R 6,000 (Dr.) 6,000 (Cr.)
(iv) Sent acceptance 6,000 (Cr.) 4,000 (Dr.) 2,000 (Dr.)
B. Madras Branch
(v) Received goods 4,000 (Cr.) 14,000 (Dr.) 10,000 (Cr.)
(vi) Sent cash 6,000 (Dr.) 8,000 (Cr.) 2,000 (Dr.)
C. Calcutta Branch
(vii) Sent goods 6,000 (Cr.) 6,000 (Dr.)
(viii) Paid B/P & cash 8,000 (Cr.) 8,000 (Dr.)
6,000 (Cr.) 6,000 (Dr.) 16,000 (Cr.) 16,000 (Dr.)

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 15
Solution 23
Journal Entry in the Books of Head Office
Date Particulars L.F. Dr. Amount Cr. Amount
30.04.2021 Mumbai Branch A/c Dr. 12,000
Chennai Branch A/c Dr. 2,80,000
To Delhi Branch A/c 60,000
To Kolkata Branch A/c 2,32,000
(Being adjustment entry passed by HO in respect of
inter-branch transactions for month of April, 2021)

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) Sent 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 & acceptances 1,20,000 (Cr.) 1,20,000 (Dr.)
D. Kolkata Branch
(9) Sent goods 1,40,000 (Dr.) 1,40,000 (Cr.)
(10) Sent cash 60,000 (Dr.) 60,000 (Cr.)
(11) Sent acceptances 60,000 (Dr.) 60,000 (Cr.)
60,000 (Cr.) 12,000 (Dr.) 2,80,000 (Dr.) 2,32,000 (Cr.)

Solution 24

Journal Entries in the Books of Noida Branch

Particulars Debit (₹) Credit (₹)
Salary Advance A/c Dr. 5,000
To Salaries A/c 5,000
(Being the amount paid as advance adjusted by debit to Salary
Advance A/c)
Prepaid Insurance A/c (11,200 X 6/12) Dr. 5,600
To Fire Insurance A/c 5,600
(Being the six months premium transferred to the Prepaid
Insurance A/c)
Head Office A/c Dr. 1,44,900
To Purchases A/c 64,500
To Wages A/c 24,000
To Salaries A/c (15,600 - 5000) 10,600
To General Expenses A/c 7,800
To Fire Insurance A/c (11,200 X 6/12) 5,600
To Manager’s Salary A/c 16,400
To Discount Allowed A/c 16,000
(Being the transfer of various revenue accounts to the HO A/c for
closing the accounts)
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 16
Sales A/c Dr. 2,78,000
Discount Earned A/c Dr. 4,600
To Head Office A/c 2,82,600
(Being the transfer of various revenue accounts to HO)
Head Office A/c Dr. 14,000
To Building A/c 14,000
(Being the transfer of amounts spent on building extension to HO
A/c)

Head Office Account

2020 Particulars Amount 2020 Particulars Amount
(₹) (₹)
Sept 30 To Cash Remittance 52,900 April 1 By Balance b/d 1,88,000
To Sundries* (Revenue) 1,44,900 By Sundries* (Revenue) 2,82,600
To Building A/c 14,000
To Balance c/d 2,58,800
4,70,600 4,70,600
* Instead of using Sundries (Revenue) A/c, the concerned revenue accounts can be posted in the ledger.

Balance Sheet of Noida Branch As at 30th Sept 2020

Liabilities Amt (₹) Assets Amt (₹)
Creditors 33,400 Debtors 2,29,000
Head Office A/c 2,58,800 Salary Advance 5,000
Prepaid Insurance 5,600
Building Extension A/c
transferred to HO
Cash in Hand 5,600
Cash at Bank 47,000
2,92,200 2,92,200

Working Notes
Cash and Bank Account
Particulars Amt (₹) Particulars Amt (₹)
To Balance b/d 26,000 By Wages 24,000
To Collection from debtors 2,57,000 By Salaries 15,600
By Insurance 11,200
By General Expenses 7,800
By HO A/c 52,900
By Manager’s Salary 16,400
By Creditors 88,500
By Building A/c 14,000
By Balance c/d
-Cash in Hand 5,600
-Cash at bank 47,000
2,83,000 2,83,000

Debtors Account
Particulars Amt (₹) Particulars Amt (₹)
To Balance b/d 2,24,000 By Cash Collection 2,57,000
To Sales A/c 2,78,000 By Discount (Allowed) 16,000
By Balance c/d 2,29,000
5,02,000 5,02,000
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 17
Creditors Account
Particulars Amt (₹) Particulars Amt (₹)
To Cash A/c 88,500 By Balance b/d 62,000
To Discount (Earned) 4,600 By Purchases 64,500
To Balance c/d 33,400
1,26,500 1,26,500
Note:
Since the date of payment of fire insurance has not been mentioned in the question, it is assumed that it
was paid on 01 April 2020. Alternative answer considering otherwise also possible.

Solution 25
New York Branch Trial Balance (in ₹)
as on 31st March, 2021
Particulars Dr. (In $) Cr. (in $) Conversion Dr. (in ₹) Cr. (in ₹)
Rate
Stock on 1.4.20 300 40 12,000
Purchases and sales 800 1,500 41 32,800 61,500
Sundry debtors and
400 300 42 16,800 12,600
creditors
Bills of exchange 120 240 42 5,040 10,080
Sundry expenses 1,080 41 44,280
Bank balance 420 42 17,640
Delhi Head office A/c 1,080 - 44,380
1,28,560 1,28,560

Solution 26
Washington Branch Trial Balance (in Rupees)
As on 30th September, 2021
Dr. Cr. Conversion
Particulars Dr. (in ₹) Cr. (in ₹)
(In US $) (in US $) Rate
Plant & Machinery 1,08,000 38 41,04,000
Furniture & Fixtures 7,200 38 2,73,600
Depreciation on
P&M =12,000 12,800 38 4,86,400
F&F = 800
Stock (01/10/20) 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 HO (Omega) 80,000 Actual 39,40,000
Wages 2,000
3,000 40 1,20,000
(+) O/S 1,000
Carriages inward 1,000 40 40,000
Salaries 6,000 40 2,40,000
Rent, Rates & taxes 2,000 40 80,000
Insurance 1,000 40 40,000
Trade expenses 1,000 40 40,000
Head Office A/c 1,14,000 Actual 43,00,000

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 18
Debtors 24,000 41 9,84,000
Creditors 17,000 41 6,97,000
Cash at Bank 5,000 41 2,05,000
Cash in hand 1,000 41 41,000
O/s Wages 1,000 41 41,000
Exchange gain (Bal. Fig.) 7,00,000
2,23,78,000 2,23,78,000

Trading and P&L A/c

Particulars Amount Particulars Amount
To Opening stock 21,84,000 By Sales 1,66,40,000
To Goods from Head Office 39,40,000 By Closing Stock (52,000 x 41) 21,32,000
To Purchases 96,00,000
To Carriage inward 40,000
To Wages 1,20,000
To Gross Profit (Bal. Fig.) 28,88,000
1,87,72,000 1,87,72,000
To Depreciation 4,86,400 By Gross Profit 28,88,000
To Salaries 2,40,000 By Exchange gain 7,00,000
To Rent , rates & taxes 80,000
To Insurance 40,000
To Trade expenses 40,000
To Net Profit (Bal. Fig.) 27,01,600
35,88,000 35,88,000
Balance Sheet
Liabilities Amount Assets Amount
Head Office 43,00,000 Plant & Machinery 41,04,000
( + ) NP 27,01,600 70,01,600 Furniture & Fixtures 2,73,600
Creditors 6,97,000 Stock 21,32,000
O/s Wages 41,000 Debtors 9,84,000
Cash at Bank 2,05,000
Cash in Hand 41,000
77,39,600 77,39,600
Note: The above solution has been given assuming that the Washington branch is a Integral foreign
operation of the Omega

Solution 27
NewYork Branch Trial Balance (in Rupees)
As on 31st March, 2021
Particulars Dr. (In US $) Cr. (in US $ ) Conversion Dr. (in ₹) Cr. (in ₹)
Rate
Fixed Assets 46,080 43 19,81,440
Depreciation on Fixed
5,120 43 2,20,160
Assets
Opening Stock 22,400 47 10,52,800
Purchases 96,000 45 43,20,000
Sales 1,66,400 45 74,88,000
Goods sent from H.O 32,000 Actual 15,80,000

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 19
Carriage inward 400 45 18,000
Branch Expenses 5,200 45 2,34,000
Outstanding
400 50 20,000
Expenses
Head Office A/c 45,600 Actual 20,50,000
Trade Debtors 9,600 50 4,80,000
Trade Creditors 6,800 50 3,40,000
Cash & Bank 2,400 50 1,20,000
Exchange Gain (bal.fig.) 1,08,400
1,00,06,400 1,00,06,400
Exchange Difference of ₹ 1,08,400 will be credited to the Statement of Profit & Loss.

Solution 28
M/S ABC & Co.
Bangalore Branch Trial Balance (in US $)
as on 31st March, 2021
Particulars Dr. (In ₹) Cr. (in ₹) Conversion Dr. (US $) Cr. (US $)
Rate
Stock on 1.4.20 3,00,000 55 5,454.55
Purchases and sales 8,00,000 12,00,000 58 13,793.10 20,689.66
Sundry debtors and
4,00,000 3,00,000 60 6,666.67 5,000
creditors
Bills of exchange 1,20,000 2,40,000 60 2,000 4,000
Wages and salaries 5,60,000 58 9,655.17
Rent, rates and taxes 3,60,000 58 6,206.90
Sundry charges 1,60,000 58 2,758.62
Computers 2,40,000 - 6,000
Bank balance 4,20,000 60 7,000
New York office A/c 16,20,000 - 29,845.35
59,535.01 59,535.01

Trading and P&L A/c

Particulars Amount Particulars Amount
To Opening stock 5,455.55 By Sales 20,689.66
To Purchases 13,793.10 By Closing Stock (4,20,000/60) 7,000
To Wages & Salaries 9,655.17 By Gross Loss (Bal. Fig.) 1,213.16
28,902.82 28,902.82
To Gross Loss 1,213.16 By Net Loss 13,778.68
To Sundry Charges 2,758.62
To Rent, rates & taxes 6,206.90
To Depreciation on computer
3,600
(6,000*.6)
13,778.68 13,778.68

Balance Sheet
Liabilities Amount Assets Amount
New York Office A/c 29,845.35 Computer (6,000 - 3,600) 2,400
( - ) Net Loss (13,778.68) 16,066.67 Stock 7,000
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 20
Creditors 5,000 Debtors 6,666.67
Bills Payable 4,000 Bills receivable 2,000
Bank Balance 7,000
25,066.67 25,066.67

Solution 29
Revenue Statement
Particulars Amount Particulars Amount
To Opening stock 12,000.00 By Sales 47,058.82
To Purchases 31,372.55 By Closing Stock (15,60,000/52) 30,000.00
To Wages 21,960.78
To Gross Profit 11,725.49
77,058.82 77,058.82
To Sundry Expenses 6,274.51 By Gross Profit 11,725.49
To Rent , rates & taxes 14,117.65 By Net Loss 13,466.67
To Depreciation on computer
4,800.00
(12,000*.40)
25,192.16 25,192.16

Balance Sheet
Liabilities Amount Assets Amount
Singapore Office A/c 59,897.43 Computer (12,000 - 4,800) 7,200.00
( - ) Net Loss (13,466.67) 46,430.76 Stock 30,000.00
Creditors 11,538.46 Debtors 15,384.61
Bills Payable 9,230.77 Bills receivable 4,615.38
Bank Balance 10,000
67,199.99 67,199.99

Working Note:
M/S Ravi & Co.
Delhi Branch Trial Balance (in US $)
as on 31st March, 2021
Particulars Dr. (In ₹) Cr. (in ₹) Conversion Dr. (US $) Cr. (US $)
Rate
Stock on 1.4.20 6,00,000 50 12,000.00
Purchases and sales 16,00,000 24,00,000 51 31,372.55 47,058.82
Sundry debtors and
8,00,000 6,00,000 52 15,384.61 11,538.46
creditors
Bills of exchange 2,40,000 4,80,000 52 4,615.38 9,230.77
Wages 11,20,000 51 21,960.78
Rent, rates and taxes 7,20,000 51 14,117.65
Sundry Expenses 3,20,000 51 6,274.51
Computers 6,00,000 - 12,000.00
Bank balance 5,20,000 52 10,000.00
Singapore office A/c 30,40,000 - 59,897.43
1,27,725.48 1,27,725.48

Solution 30
Canberra, Australia Branch Trial Balance (in Rupees)
As on 31st March, 2021
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 21
Particulars Dr. (In Aus Cr. (in Aus.$ Conversion Dr. (in ₹ Cr. (in ₹
$ thousands) thousands) Rate thousands) thousands)
Plant & Machinery 200 46 9,200
Plant & Mach(Dep. Res) 130 46 5,980
Debtors & Creditors 60 30 53 3,180 1,590
Stock (01/4/20) 20 50 1,000
Cash & Bank Balance 10 53 530
Purchases & Sales 20 123 51 1,020 6,273
Goods received from HO 5 Actual 100
Wages & Salaries 45 51 2,295
Rent 12 51 612
Office expenses 18 51 918
Commission Receipt 100 51 5,100
H.O Current A/c 7 Actual 120
Exchange loss (Bal. Fig.) 208
19,063 19,063

Trading and P&L A/c for the year ended 31st March, 2021
Particulars HO Branch Particulars HO Branch
To Opening stock 100 1,000 By Sales 520 6,273
To Purchases 240 1,020 By Goods Sent to Branch 100 -
To Goods from HO - By Closing Stock 150
100 165.625
(3,125*53/1,000)
To Wages & Salaries 75 2,295
To Gross Profit 355 2,023.625
770 6,438.625 770 6,438.625
To Rent - 612 By Gross Profit 355 2,023.625
To Office Expenses 25 918 By Commission Receipts 256 5,100
To Depreciation(W.N.) 460 644
To Provision for
14 159
Doubtful Debts @5%
To Net Profit 112 4,790.625
611 7,123.625 611 7,123.625

Combined P&L A/c for the year ended 31st March, 2021
Particulars Amount Particulars Amount
To Managing Partner’s Salary 30 By Net Profit (112+4,790.625) 4,902.625
To Exchange Loss 208 By Stock Reserve (Opening) 4
To Net Profit (Bal. Fig.) 4,668.625
4,906.625 4,906.625

Working Note:
HO Branch
Building – Cost 1,000
Less: Dep. Reserve (200)
800
Depreciation @ 10% (A) 80
Plant & Machinery Cost 2,500 9,200
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 22
Less: Dep. Reserve (600) (5,980)
1,900 3,220
Depreciation @ 20% (B) 380 644
Total Depreciation (A+B) 460 644
Note:
1. In the above solution, it has been assumed that the Australia branch is an integral foreign operation of
M & S Co. Alternative solution considering branch as nonintegral foreign operation is also possible.
2. As the closing stock of Branch does not consist any stock transferred from M& S Co., there is no need
to create closing stock reserve. But opening branch stock reserve has to be reversed in the P&L A/c.

Solution 31
Sydney Branch Trial Balance (in Rupees)
As on 31st March, 2021
Particulars Dr. (In Aus Cr. (in Aus.$ Conversion Dr. (in ₹ Cr. (in ₹
$ thousands) thousands) Rate thousands) thousands)
Plant & Machinery 200 18 3,600
Plant & Mach(Dep. Res) 130 18 2,340
Debtors & Creditors 60 30 24 1,440 720
Stock (01/4/20) 20 20 400
Cash & Bank Balance 10 24 240
Purchases & Sales 20 123 22 440 2,706
Goods received from HO 5 Actual 100
Wages & Salaries 45 22 990
Rent 12 22 264
Office expenses 18 22 396
Commission Receipt 100 22 2,200
H.O Current A/c 7 Actual 120
Exchange loss (Bal. Fig.) 216
8,086 8,086

Solution 32
In the Books of Head Office
Branch Trading and Profit & Loss A/c (in Dollars)
for the year ended 31st December, 2021
Particulars Amount Particulars Amount
To Opening stock 6,720 By Sales 50,400
To Goods from Head Office 38,400 By Closing Stock (Bal. Fig.) 4,800
To Gross Profit (50,400*25/125) 10,080
55,200 55,200
To Depreciation 1,440 By Gross Profit 10,080
To Expenses 3,000
To Manager’s Commission
282
(W.N.1)
To Net Profit (Bal. Fig.) 5,358
10,080 10,080

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 23
Working Note 1:
Calculation of manager’s commission @ 5% on profit
i.e. 5% of $[10,080 – (3,000 + 1,440)] Or 5% × $5,640 = $ 282
Manager’s commission in Rupees = $ 282 x 66 = ₹ 18,612

Converted Branch Trial Balance (in Rupees)

Particulars Dr. (In US $) Cr. (in US $ ) Conversion Dr. (in ₹) Cr. (in ₹)
Rate
Machinery 14,400 46 6,62,400
Opening Stock 6,720 64 4,30,080
Goods sent from H.O 38,400 Actual 23,55,600
Sales 50,400 65 32,76,000
Expenses 3,000 65 1,95,000
Debtors& Creditors 2,880 2,040 66 1,90,080 1,34,640
Bank 720 66 47,520
Head Office A/c 13,680 Actual 5,16,000
Exchange Difference
45,960
(bal.fig.)
39,26,640 39,26,640
Exchange Difference of ₹ 45,960 will be debited to the Statement of Profit & Loss.

Branch Trading and Profit & Loss A/c

for the year ended 31st December, 2021
Particulars Amount Particulars Amount
To Opening stock 4,30,080 By Sales 32,76,000
To Goods from Head Office 23,55,600 By Closing Stock (4,800*66) 3,16,800
To Gross Profit (Bal. Fig) 8,07,120
35,92,800 35,92,800
To Depreciation (6,62,400*10%) 66,240 By Gross Profit 8,07,120
To Expenses 1,95,000
To Exchange Difference 45,960
To Manager’s Commission
18,612
(W.N.1)
To Net Profit (Bal. Fig.) 4,81,308
8,07,120 8,07,120

Branch A/c
Amount Amount
To Balance b/d 5,16,000 By Machinery (6,62,400-66,240) 5,96,160
To Net Profit 4,81,308 By Stock 3,16,800
To Creditors 1,34,640 By Debtors 1,90,080
,To O/s Manager’s Commission 18,612 By Cash at Bank 47,520
11,50,560 11,50,560

The copyright of these notes is with C.A. Nitin Goel

No part of these notes may be reproduced in any manner without his prior permission in writing