PSG COLLEGE OF ARTS & SCIENCE

An Autonomous College – Affiliated to Bharathiar University

Accredited with ‘A’ Grade by NAAC (3rd Cycle)
College with Potential for Excellence (Status Awarded by the UGC)
Star College Status Awarded by DBT-MST, An ISO 9001-2015 Certified Institution
Coimbatore – 641014.

SUBJECT NAME: Financial Accounting

BRANCH ACCOUNTS
Branch Account (in the books of head office)
Particulars Rs. Rs. Particulars Rs. Rs.
To Balance B/d: BY Balance b/d
(Assets in the beginning) (Opening balance of liabilities
Stock XXX account if any)
Debtors XXX Creditors XXX
Petty Cash XXX Outstanding expenses XXX XXX
Furniture XXX By Bank:
Prepaid expenses XXX XXX Cash sales XXX
To Goods sent to branch A/c XXX Cash collected from debtors XXX XXX
To Bank (expenses paid by H.O) XXX By Goods sent to Branch A/c
To balance c/d (closing balance of (return to H.O.) XXX
liabilities accounts if any) By Balance c/d
Creditors XXX (Closing balance of Assets)
Outstanding expenses XXX XXX Stock XXX
To General P & L A/c XXX Debtors XXX
(Branch Profit (B/F) Petty cash XXX
Furniture XXX
(at depreciated value)
Prepaid expenses XXX XXX
By General P & L A/c
(Branch Loss (B/F) XXX
XXX XXX
Problem: 1
From the following particulars relating to Hyderabad branch for the year ended 31.12.90, prepare branch
A/c in the head office books:
Particulars Rs. Rs.
Stock at the branch on 1.1.90 Dr. 15,000
Debtors at the branch on 1.1.90 Dr. 30,000
Petty cash at the branch on 1.1.90 Dr, 300
Goods sent to branch during 1990 Dr. 2,52,000
Cash sales 1990 Cr. 60,000
Received from debtors 1990 Cr. 2,10,000
Credit sales during 1990 2,28,000
Cheques sent to branch during 1990:
For salaries Dr. 9,000
For rent & rates Dr. 1,500
For petty cash Dr. 1,100 11,600
Stock at the branch on 31.12.90 Cr. 25,000
Petty cash 31.12.90 Cr. 200
Goods returned by the branch Cr. 2,000
Debtors on 31.12.90 Cr. 48,000

Solution:
In the books of Head Office
Hyderabad Branch A/c
Date Particulars Rs. Date Particulars Rs.
Jan 1 To Balance b/d Dec31 By Bank
Stock 15,000 Cash sales 602,000
Debtors 30,000 Cash received from debtors 2,10,000
Petty cash 300 Dec 31 By Goods sent to branch
To Goods sent to branch A/c 2,52,000 (returns to H.O.) 2,000
Dec 31 To Bank: By Balance c/d:
Salaries 9,000 Stock 25,000
Rent & rates 1,500 Debtors 48,000
Petty cash 1,100 Petty Cash 200
To General P & L A/c (Profit) 36,300
3,45,200 3,45,200
Problem: 2
The following information relates to Madurai branch
Particulars Rs. Rs.
Stock on 1.1.94 Dr. 11,200
Branch debtors on 1.1.94 Dr. 6,300
Goods sent to branch Dr. 51,000
Cash sent to branch for:
Rent Dr. 1,500
Salaries Dr. 3,000
Petty cash Dr. 500 5,000
Sales at branch:
Cash Cr. 25,000
Credit 39,000 64,000
Cash received from Debtors Cr. 41,200
Stock on 31.12.94 Cr. 13,600
Debtors on 31.12.94 4,100
Prepare Branch account for the year 1994.
Calculation of closing debtors
Branch Debtors A/c
Date Particulars Rs. Date Particulars Rs.
1.1.94 To Balance b/d 6,300 By Cash 41,200
To Sales (Credit) 39,000 31.12.94 By Balance C/d (B/F) 4,100
45,300 45,300

Solution:
In the books of Head Office
Hyderabad Branch A/c
Date Particulars Rs. Date Particulars Rs.
Jan 1 To Balance b/d Dec31 By Bank
Stock 11,200 Cash sales 25,000
Debtors 6,300 Cash received from debtors 41,200
Dec 31 To Goods sent to branch A/c 51,000 Dec 31 By Balance c/d:
To Bank: Stock 13,600
Rent 1,500 Debtors 4,100
Salaries 3,000
Petty cash 500
To General P & L A/c (Profit) 10,400
83,900 83,900
Problem: 3

In the books Head Office

Journal Entries

Date Particulars L.F. Debit (Rs.) Credit (Rs.)

1.1.2017 Chandigarh Branch A/c Dr. 12,12,500
To Branch Stock A/c 7,50,000
To Branch Petty Cash A/c 12,500
To Branch Furniture A/c 4,50,000
1.1.2017 to Chandigarh Branch A/c Dr. 37,75,000
31.12.2017 To Goods sent to Branch A/c 37,75,000
Chandigarh Branch A/c Dr. 3,25,000
To Bank A/c 3,25,00
(2,50,000+75,000)
Goods sent to Branch A/c Dr. 25,000
To Chandigarh Branch A/c 25,000
Bank A/c Dr. 52,50,000
To Chandigarh Branch A/c 52,50,000
31.12.2017 Chandigarh Branch A/c Dr. 25,000
To Branch Outstanding salary A/c 25,000
31.12.2017 Brach Stock A/c Dr. 10,00,000
Branch Petty Cash A/c Dr. 20,000
(12,500+75,000-67,500)
Branch Furniture A/c Dr. 4,05,000
(450,000-(4,50,000X10%))
=4,50,000-45,000 = 4,05,000
To Chandigarh Branch A/c 14,25,000
31.12.2017 Chandigarh Branch A/c Dr. 13,62,500
To General P & L A/c 13,62,500
 In the books of Head Office
Chandigarh Branch A/c
Date Particulars Rs. Rs. Date Particulars Rs.

1.1.2017 to By Bank A/c (Cash

1.1.2017 To Branch Stock A/c 7,50,000 31.12.2017 Sales) 52,50,000
To Branch Petty Cash A/c 12,500 31.12.2017 By Branch Stcok A/c 10,00,000
By Branch Petty Cash
To Branch Furniture A/c 4,50,000 A/c 20,000

1.1.2017 to To Goods Sent to Branch By Branch Furniture

31.12.2017 A/c 37,75,000 A/c 4,05,000
Less: Goods sent to Branch
A/c (Return) 25,000 37,50,000
To Branch Outstanding
salary A/c 25,000
To Bank A/c (Expenses) 3,25,000

To General Profit & Loss

A/c (Branch Profit
Transferred) 13,62,500
66,75,000 66,75,000

Problem: 4

Memorandum Branch Debtors Account

Particulars Rs. Particulars Rs.

To Balance B/d 72,000 By Bank A/c 3,20,000

To Credit sales 3,60,000 By Discount allowed A/c 6,000

By Bad Debts A/c 4,000

By Sales Return A/c 8,000

By Balance C/d (B/F) 94,000

4,32,000 4,32,000

In the books of Head Office (Bauxite Industries)

Cochin Branch A/c
Particulars Rs. Rs. Particulars Rs.
 To Balance B/d: By Bank A/c
Stock 60,000 Cash Sales 2,00,000
Cash received from
Debtors 72,000 debtors 3,20,000
To Goods Sent to Branch A/c 6,00,000 By Balance C/d:
Less: Return to H.O 12000 5,88,000 Stock 1,20,000
To Bank A/c: Debtors 94,000
Rent, Rates and taxes 18000 By Stock Reserve A/c
Salaries, wages and bonus 60000 (60000X1/5) 12000
By Goods sent to
Office expenses 6000 84,000 Branch A/c
To Stock Reserve A/c (588000X1/5) 1,17,600
(1,20,000X1/5) 24000

To Profit transferred to P
& L A/c 35,600
8,63,600 8,63,600

Problem: 5

Solution:

In the books of Head Office

Delhi Branch A/c
Particulars Rs. Rs. Particulars Rs. Rs.
To Balance B/d: By Bank A/c:
Petty Cash 2000 Cash Sales 45000
Stock: Cash received from Debtors 125000
 2400
Transfer from H.O. 0 By Balance C/d:
1600
Direct Purchase 0 40000 Petty Cash 1850
Debtors 25000 Stock:
1800
To Bank A/c (Direct Purchase) 45000 Transfer from H.O. 0
1200
To Goods Sent to Branch A/c 60000 Direct Purchase 0 30000
To Bank A/c (for petty expenses) 2,500 Debtors 24000
To Bank A/c (Expenses) 30000 By Stock Reserve (24000X1/6) 4000
To Stock Reserve (18000X1/6) 3000 By Goods Sent to Branch A/c
(60000X1/6) 10000
To Profit & Loss A/c (Transfer) 32,350

23985 23985
0 0

Problem: 6

Solution:

TRADING AND PROFIT AND LOSS ACCOUNT

for the year ended 31st March 2018
Particulars Rs. Particulars Rs.
To Opening Stock By Sales
(12000 - (12000X1/6))=12,000-2,000 10000 Cash 8750
To Goods Sent to Branch A/c Credit 20500
(15000 - (15000X1/6)) = 15000-2500 12,500 By Closing Stock
(9000 - (9000X1/6) = 9000-1500 7500
To Gross Profit c/d 14,250
 36750 36750

To Expenses A/c 5,200 By Gross Profit b/d 14,250

To Net Profit Transferred to General P & L

A/c 9,050
14,250 14,250

In the books of Head Office

Delhi Branch A/c
Particulars Rs. Particulars Rs.
To Balance B/d: By Bank:
Stock 12000 Cash Sales 8750
Debtors 3030 Cash Received from Debtors 18950
To Goods Sent to Branch 15,000 By Balance C/d:
To Bank (Expenses) 5200 Stock 9000
Debtors 4,580

To Stock Reserve (9000X1/6) 1500 By Stock Reserve (12,000X1/6) 2000

By Goods sent to Branch (15000X1/6) 2500

To Net Profit Transferred to

General P & L A/c 9,050
45,780 45780

Sundry Debtors A/c

Particulars Rs. Particulars Rs.
To Balance B/d (B/F) 3,030 By Bank A/c 18950
To Sales A/c 20500 By Balance C/d 4580

23,530 23530

Problem: 7
Solution:
In the books of Head Office
Chennai Branch Stock A/c
Date Particulars Rs. Rs. Date Particulars Rs. Rs.
To Goods Sent to
1.10.2017 Branch 48000 31.03.2018 By Branch Debtors A/c 29000
Less: Goods
Return to H.O. 2000 46000 31.03.2018 By Balance C/d: Stock 16800
By Branch Adjustment A/c
31.03.2018 (200X1/4) 50
By Branch P & L A/c 150 200
46000 46000

Chennai Branch Adjustment A/c

Date Particulars Rs. Rs. Date Particulars Rs. Rs.
To Branch Stock
31.03.2018 A/c 50 31.03.2018 By Goods sent to Branch A/c
To Stock
31.03.2018 Reserve A/c (46000X1/4) 11500
(16800 X1/4) 4200

To Branch P &
31.03.2018 L A/c 7250
11500 11500

Chennai Branch Profit & Loss A/c

Date Particulars Rs. Rs. Date Particulars Rs. Rs.
To Branch Stock
31.03.2018 A/c 150 31.03.2018 By Branch Adjustment A/c 7,250
To General P &
31.03.2018 L A/c 7100

7250 7250

Goods sent to Branch A/c

Date Particulars Rs. Rs. Date Particulars Rs. Rs.
To Branch Stock
31.03.2018 A/c 2,000 1.10.2017 By Branch Stock A/c 48,000
To Branch
31.03.2018 Adjustment A/c 11500
To Purchase
31.03.2018 A/c (Transfer) 34,500
48000 48000
Problem: 8

Solution:

In the Books of H.O

Journal Entries
Date Particulars Debit (Rs.) Credit (Rs.)
1 Goods in Transit A/c Dr. 150
To Kanpur Branch A/c 150
(Being Goods in Transit on 31st Dec.)

2 Kanpur Branch A/c Dr. 300

To Mumbai Branch A/c 300
(Being inter branch transfer of goods)

3 Machinery A/c Dr. 3000

To Kanpur Branch A/c 3000
(Being the amount Pai by Kanpur
Branch for purchase of Machine by us)

4 Kanpur Branch A/c Dr. 2000

To Kanpur Branch Furniture A/c 2000

(Being Depreciation Provided on Branch Furniture)

5 Cash in Transit A/c Dr. 8500

To Kanpur Branch A/c 8500
(Being amount sent by Kanpur Branch but not yet
received)

6 Dividend A/c Dr. 100

To Mumbai Branch A/c 100

(Bieng Divident Paid by Branch on behalf of HO)

7 Kanpur Branch A/c Dr. 2000
To Customer A/c 2000
(Being amount collected by Kanpur Branch from
our customer)