ACCOUNTANCY FORM 5 – BRANCH ACCOUNT

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ILLUSTRATION 3

A is in business as a retailer in light machinery with a head office at Loliondo and  a branch at Bagamoyo. All purchases are made at the head office. Any goods sent to branch are invoiced at cost. Branch manager is entitled  to a commission of 10% of branch net profit after charging such commission. The following trial balance was drawn up on 31st March 2012.

TRIAL BALANCE AS AT 31ST MARCH 2012

DETAILS H/OFFICE DR H/OFFICE BRANCH BRANCH
CR DR CR
Capital   100,000    
Drawings 12,000    
Stock 1st April 28,200    16,400
Purchases 381,300    
Sales 328,100   155,900
Goods from H.O to branch 110,600 110,600  
Head office/branch a/c 15,600 15,600
Debtors 37,700  17,800
Creditors   41,300    
Administration expenses 33,000  6,400
Selling and nglish-swahili/distribution” target=”_blank”>distribution expenses 25,800  3,800
Motor vehicle, Net of depreciation  20,000    7,500
Furniture, Net off depreciation 10,500  3,400
Managers commission only    1,200  
Cash at bank 15,900  4,400  
  580,000 580,000 171,500 171,500
         

 

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NOTES:

  1. Stock on 31 March 2012 Head office 41,400 and branch 17,580. There were no stock in transit
  2. Charge 20% depreciation using reducing balance method on motor vehicle and furniture
  3. Charge 30% depreciation of   H.O admin expenses (including depreciation of fixed asset to branch)

 

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Required;-

Draw up final a/c of A for the year ended 31st March 2012 showing the profit loss made by the Head Office and branch separately and balance sheet as at that date.

 DR     TRADING, PROFIT AND LOSS A/C FOR THE YEAR ENDED 31ST MARCH 2012     CR

DETAILS HEAD OFFICE BRANCH DETAILS HEAD OFFICE BRANCH
Opening stock 28,200 16,400 Sales 328,100 155,900
Add: Purchases 38,300   110,600  
Good received   110,000    
G.A.F.S 409,500 127,000    
Less: C/stock 41,400 17,580    
G.A.F.S 409,500 127,000    
Less: C/stock 41,400 17,580    
C.O.G.S 368,100 109,720    
Gross profit c/d 70,600 46,480    
  438,700 155,900   438,700 155,900
Admin expenses 23100 16300 Gross profit b/d 70,600 46,480
D&D Expenses 25800 3,800    
Depr: Furniture 2100 680    
Depr: M. Vehicle 4000 1500    
Managers com 2200    
Net profit 15600 22000    
  70,600 46,480   70,600 46,480

 

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                       FINANCIAL POSITION AS AT 31ST MARCH 2012

NON-CURRENT ASSETS

 

     
Motor vehicle 22,000    
 Furniture  11,120    33,120
CURRENT ASSETS      
Closing stock 58,980    
Branch a/c 15,600    
Debtors 55,500    
Cash at bank 20,300 150,380  
       
       
CURRENT   LIABILITIES      
Creditors 41,300    
Owing 1000    
Head office a/c 15,600 -57,900  92,480
       125,600
FINANCED BY      
Capital      100,000
Add: Net profit      37,600
       137,600
Less Drawings      12,000
       125,600
         

 

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ILLUSTRATION ON PREPARING BRANCH CURRENT A/C

                                         AND   H/O CURRENT A/C.

P Limited as a head office In Moshi and branch at Lindi. Lindi branch maintains a full set of accounts. During March 2009 the following transactions took place between Head office and branch.
Balance on branch current a/c was                                   12560
Motor vehicle bought by Head office at cost                         2200
Goods returned by branch to head office was                        530
Cash remitted by branch to head office was                         5120
Goods Branch managers salaries paid by head office              350
Goods sent to branch……………………………………………….4990

Required;-
-Draw up Branch current a/c in head office books and
-Draw head office current a/c in the   ledger of the branch.

 IN THE BOOKS OF HEAD OFFICE

   DR                                               BRANCH CURRENT   A/C                                                       CR

balance       b/d 12560 Goods returned to h/o 530
cash: motor vehicle 2200 cash remittance 5120
cash: manager’s salaries 350  
Goods sent to branch 4990  
  20,100 balance   c/d 14,450
20,100 20,100
balance   b/d 14,450  
       

 

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 IN THE BOOKS OF BRANCH

    DR                                                 H/O   CURRENT   A/C                                                         CR

Goods returned by branch 530 balance   b/d 12560
cash remittance 5120 cash: motor vehicle 2200
    cash: manager’s salaries 350
balance   c/d 14,450 Goods sent to branch 4990
20,100 20,100
    balance   b/d 14,450
       

 

edu.uptymez.com

edu.uptymez.com

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