B.A. (SOL)



Contact Us

Branch Account

Q.1. Widespread Ltd. invoices goods to its branch at cost plus 20%. The branch sells for cash as well as on credit. The branch meets its expenses out of cash collected from its debtors and cash sales and remits the balance of cash to head office after withholding Rs 10,000 necessary for meeting immediate requirements of cash. On 31st March, 2001 the assets at the branch were as follows:

Rs. ('000)
Cash in Hand 10
Trade Debtors 384
Stock at Invoice Price 1,080
Furniture and Fittings 500

During the accounting year ended 31st March, 2002 the invoice price of goods dispatched he head office to the branch amounted to Rs. 1 crores 32 lakh. Out of the goods received by it, the branch sent back to head office goods invoiced at Rs. 72,000. Other transitions at the branch during the year were as follows:

Rs. (‘000)
Sales 97,000
Credit Sales 3,140
Cash Discount allowed to Debtors 58
Returns by Customers 102
Bad Debts written off 37
Expense paid by Branch 842
Cash Collected from Debtors 2,842

On 1st January, 2002 branch purchased new furniture for Rs. 1 lakh for which payment was made by head office through a cheque.

On 31st March 2002 branch expenses amounting to Rs. 6,000 were outstanding and cash in hand was, again Rs. 10,000. Furniture is subject to depreciation @ 16% per annum on diminishing balances method.

Prepare Branch Account in the books of head office for the year ended 31st March, 2002
[Ans. Profit Rs. 1096 in thousands.]

Q.2. H Ltd. Bombay has a branch in Delhi to which goods are invoiced at 20% on sales. From the following data prepare a Delhi Branch Accounts for the year ending on 31st December, 1999:

Balance on 1st January, 1999 :
Branch stock(at cost to H.O) 10,000
Branch Debtors 8,500
Branch Cash 2,000
Personal Computer 25,000

Transaction during 1999:
Credit sales at branch 87,500
Cash sales at branch 51,250
Goods return to H.O at selling price 6,250
Cash received from customer 78,650
Bill receivable received from customer At branch 5,000
Discounted of bill stated above 4,900
Cash send to brand, for expenses 18,000
Actual cash expenses at Branch 17,950
Shortage of stock at branch at selling price 75
Cash discount allowed to debtor 390
Sale of one Personal computer on 1-7-1999 6,000
(Book value on the date of sale Rs. 9,000)

Balance on 31st December, 1999
Branch stock (at cost to Branch) 29,925
Branch Debtors ?
Branch Cash 4,500
Depreciate Personal Computer at 20% pa
[Ans. Profit Rs. 2,250.]

Q.3. Red and Co. of Mumbai started a branch a Bangalore on 1.4.2006 to which goods were sent at 20% above cost. The branch makes both cash sales and credit sales. Branch expenses are met from branch cash and balance money remitted to H.O. The branch does not maintain double entry books of account and necessary accounts relating to branch are maintained to H.O. Following further details are given for the year ending on 31.3.2007 :

Cost of goods sent to branch 1,00,000
Goods received by branch till 31.3.2007 at Invoice price 1,08,000
Credit sales for the year 1,16,000
Closing debtors on 31.3.2007 41,600
Bad debts written off during the year 400
Cash remitted to H.O. 86,000
Closing cash on hand at branch on 31.3.2007 4,000
Cash remitted by H.O. to branch during the year 6,000
Closing stock in hand at branch at invoice price 12,000
Expenses incurred at branch 24,000

Draw up the necessary Ledger Accounts like Branch Debtors Account, Branch Stock Account, Goods sent to Branch Account, Branch Cash Account; Branch Expenses Account and Branch Adjustment A/c for ascertaining gross profit and Branch Profit and Loss A/c ascertaining Branch profit.

Q.4. Hindustan Industries Bombay has a branch in Cochin to which office goods are invoiced at cost plus 25%. The Branch sells both for cash and on credit, Branch Expenses are paid direct from head office and the branch has to remit all cash received into the Head Office Bank Account at Cochin.

From the following details relating to the colander year 1985 prepare the accounts in the head office books. Branch does not maintain any books of account, but sends weekly returns to head office:

Goods received form Head Office at invoice price 6,00,000
Returns to Head Office at invoice price 12,000
Stock at Cochin as on 1st Jan. 1985 60,000
Sales in the year Cash 2,00,000
                         Credit 3,60,000
Sundry Debtors at Cochin as on 1st Jan. 1985 72,000
           Cash received from Debtors 3,20,000
           Discount allowed to debtors 6,000
           Bad Debts in the year 4,000
Sales returns at Cochin Branch 8,000
Rent rates, taxes at Branch 18,000
Salaries wages, bonus at Branch 60,000
Office expenses 6,000
Stock at branch on 31st December 1985 at invoice price 1,20,000
[Ans. Branch P/L 35,600.]

Q.5. Poonam Ltd. Mumbai started a branch in Delhi on 1, April 1999 to which goods were sent 20% above the cost. The branch makes both credit and cash sales. Branch expenses are met from branch cash, balance money remitted to H.O. The branch does not maintain double entry books of account and necessary accounts relating to branch are maintained in H.O. Following further details are given for the year ended on 31 March 2000:

Cost of goods sent to branch 50,000
Goods received by 6 branch till 31st March 20,000 invoice price  54,000
Credit Sales for the year 58,000
Debars as on 31st March 2000 20,800
Bad debts 200
Cash remitted to H.O 43,000
Cash in hand at branch on 31st March 2000 2,000
Cash remitted by H.O to branch during the year 3,000
Closing stock at branch at invoice price 6,000
Expenses incurred at branch 12,000

Show the branch account in the books of head office the determine the profit and loss of the branch for the year ended in 31st March 2000.
[Ans. Profit Rs. 22,800.]

Q.6. Mahesh established a retail business in Delhi several years ago and has since opened branch stops in Mumbai, Calcutta and Chennai. All the purchasing and administration is done at the head office. Branches are also allowed to purchase locally in special circumstances. 

Branches sell both of cash and on credit terms, but all invoices for credit sales are invoiced from Delhi and payments from credit customers received there. The brandies are expected to achieve a profit of 50% on cost price. The following information relates to the Bombay branch for the first six months of 1999:
Opening stock of goods at branch(cost price) 28,000
Opening debtors 9,000
Goods received by branch at selling price 1,80,000
Credit sales 60,000
Cash sales 1,02,000
Transfer from other branches to Mumbai branch at selling price 12,000
Transfer to other branches from Mumbai branch at selling price 21,000
Goods returned to H.O. at selling price 6,000
Cash form debtors received at H.O. 53,000
Bad debtors written off 2,000
Goods returned by credit customers to branch 2,400
Goods returned by credit customers to H.O 1,200
Goods purchased by Mumbai branch from local suppliers(cost) 15,000
Expenses at the branch 7,500
Closing stock at branch
From H.O. at selling price 45,000
From local purchases 3,000

Additional information:
1. Goods amounting to Rs.6,000 at cost to H.O. were in transit
2. Branch had on 1 January 1999 furniture and other equipment at a book value of Rs. 7,500. Deprecation at 10% p.a. is to be provided on this item.
3. Goods purchased locally were sold at 25% profit on sale price.


(1) Branch stock account
(2) Branch debtor's account and
(3) Mumbai branch account
[Ans. Profit Rs. 29,325.]

About Study Online Help

We provide notes for good marks in Exam. You can download and share with friends. Sample Paper, Practice Paper, Model Test Paper, Important Question, VBQ Question, HOTS Question. Download free PDF and Video. Prepared by expert teachers from the latest edition of CBSE (NCERT) books.

Disclaimer: This website is not affiliated with any Education Board/University in any manner what so ever.