Question

Q5. Mohan of Mumbai has a branch at Delhi. Goods are invoiced from the head office at cost

plus 33⅓%. Branch is allowed to make sales at invoice price only. Expenses of the branch

except petty expenses are paid directly by head office.

From the following particulars, you are required to prepare the necessary accounts to

ascertain the net profit at the branch according to the debtors system.

Debtors on 1.4.2019 10000

Petty Cash on 1.4.2019 1000

Stock on 1.4.2019 8000

Furniture on 1.4.2019 2000

Goods invoiced by Head Office 88000

Cash sent by head office for petty expenses at the branch 2000

Cash Sales 50000

Credit Sales 36000

Sales Returns by branch debtors 800

Goods damaged at invoice price( amount recovered from the claim Rs 500) 1000

Goods returned by branch to head office 2000

Cash remitted by branch to head office 70500

Branch Expenses:

Carriage 500

Office rent and salary 4900

Bad debts and discount allowed 150

Depreciation on Furniture 200

Petty Expenses 1500 ​

Answer 1

Explanation:

Dr. Branch Stock Account [Invoice price]

Particulars ` Particulars `

To Balance b/d

To Goods Sent to Branch A/c

To Branch Debtors (Return)

24,000

4,80,000

6,000

By Bank A/c (Cash Sales)

By Branch Debtors (Credit Sales)

By Abnormal Loss:

By Adjustment 500

By P/L A/c 1,500

By Balance c/d

1,80,000

2,80,000

2,000

48,000

5,10,000 5,10,000

Dr. Nagpur Branch Debtors Account

Particulars ` Particulars `

To Balance b/d

To Branch cash (Dishonour of

cheques)

To Branch Stock A/c Credit sales

(b.f.)

30,000

5,000

2,80,000

By Branch cash

By Branch Stock A/c (return)

By Branch Bad Debts

By Branch Discount allowed

By Balance c/d

2,70,000

6,000

1,500

1,000

36,500

3,15,000 3,15,000