INDEPENDENT BRANCH Dr. Cr. (i) (ii) (iii) In the Books of Y Ltd. Journal Entries Date Particulars Debit (Rs.) Credit (Rs.) (i) (4, ,400)]

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2 INDEPENDENT BRANCH 1. The following is the Trial Balance of Calcutta Branch as on 31 March, 2008 : Dr. Cr. Bombay Head Office A/c 32,400 Stock on ,000 Purchases 1,78,000 Goods received from H.O. 90,000 Sales 3,80,000 Goods supplied to H.O. 60,000 Salaries 15,000 Debtors 37,000 Creditors 18,500 Rent 9,600 Office expenses 4,700 Cash and bank balance 17,800 Furniture 14,000 4,58,500 4,58,500 Closing stock was valued at 27,000. The Branch A/c in the books of Head Office stood at 4,600 (Debit Balance) on On 28 March, 2008 the Head Office forwarded goods to the value of 25,000 to the branch where they were received on 3 April Required in the books of H.O.: (i) (ii) (iii) Branch Trading and Profit and Loss Account. Journal entries to incorporate the above trial balance; and Calcutta branch account. 14 In the Books of Y Ltd. Journal Entries Date Particulars Debit () Credit () (i) Goods-in-Transit Account Dr. 25,000 Cash-in-Transit Account Dr. 12,000 To Calcutta Branch Account 37,000 [(Being goods and cash in transit, the total being equal to the difference between Branch Account and H. O. Account (4, ,400)] (ii) Calcutta Branch Trading Account Dr. 3,28,000 To Calcutta Branch Account 3,28,000 [Being incorporation of opening stock ( 60,000), Purchases ( 1,78,000) Goods Received from H. O. ( 90,000)] (iii) Calcutta Branch Account Dr. 4,67,000 To Calcutta Branch Trading Account 4,67,000 [Being incorporation of Sales (3,80,000), Returns to H. O. ( 60,000) and Stock at the end ( 27,000)] (iv) Calcutta Branch Trading Account Dr. 1,39,000 To Calcutta Branch Profit & Loss Account 1,39,000 (Being the gross profit at the branch) (v) Calcutta Branch Profit & Loss Account Dr. 29,300 To Calcutta Branch Account 29,300 [(Being incorporation of salaries ( 15,000) Rent ( 9,600) and Office expences (4,700)] (vi) Calcutta Branch Profit and Loss Account Dr. 1,09,700 To (General) Profit and Loss Account 1,09,700

3 [(Being the transfer of branch net profit to general profit and loss account)] (viii) Calcutta Branch Stock Account Dr. 27,000 Calcutta Branch Debtors Account Dr. 37,000 Calcutta Branch Cash and Bank Account Dr. 17,800 Calcutta Branch Furniture Account Dr. 14,000 To Calcutta Branch Account 95,800 (Being the incorporation of branch creditors) Calcutta Branch Account Dr. 18,500 To Calcutta Branch 18,500 Creditors Account (Being the incorporation of branch creditors) Calcutta Branch Trading and Profit and Loss Account For The Year Ending On 31 March 2008 Calcutta Branch Account : Calcutta Branch Account : Opening stock 60,000 Sales 3,80,000 Purchases 1,78,000 Stock at the end 27,000 Goods Received Goods supplied from H.O. 90,000 3,28,000 to H.O. 60,000 4,67,000 Calcutta Branch Profit & Loss Account 1,39,000 (Gross Profit) Calcutta Branch Account : 4,67,000 4,67,000 Calcutta Branch Trading Salaries 15,000 Account 1,39,000 Rent 9,600 Office Expenses 4,700 29,300 (General) Profit & 1,09,700 Loss Account 1,39,000 1,39,000 Calcutta Branch Account Balance b/d 4,600 Cash-in-Transit Account 25,000 Calcutta Branch Trading Account 4,67,000 Goods-in-Transit Account 12,000 Calcutta Branch Creditors Account 18,500 Calcutta Branch Trading 3,28,000 Account Calcutta Branch Profit and Loss Account 29,300 Calcutta Branch Assets Accoun t 95,800 4,90,100 4,90,100

4 2. On , Kanpur Branch of Rajni Enterprises submits the following Trial Balance to its Head Office at Delhi : ( in thousands) Dr. Balances Cr. Balances Furniture 900 Outstanding Expenses 150 Depreciation on Furniture 100 Goods returned to Head Office 250 Salaries 1,250 Sales 18,000 Advertising 300 Head Office A/c 4,000 Telephone charges 150 Office expenses 50 Stock (1-4-04) 3,000 Goods received from Head Office 14,400 Debtors 1,000 Cash in hand 400 Carriage inward ,400 22,400 Stock on 31 March, 2005 was valued at 31,00,000. On 29 March, 2005 the Head office sent goods costing 5,00,000 to its branch. Branch did not receive these goods before 1 April, The Head Office has charged the Branch with 50,000 for services rendered by head office for which no entry has been made by the branch. You are required to : (i) Pass Journal entries in the books of Head Office to incorporate the whole of branch trial balance and to make necessary adjustments. (ii) Prepare Trading and Profit and Loss Account for the Branch in Head Office books. 10 In the Books of H.O. Branch Trading and Profit and Loss Account For the Year Ending 31 March 2005 Opening Stock 30,00,000 Goods Returned to H.O. 2,50,000 Goods Received from H.O. 1,44,00,000 Sales 18,00,000 Carriage Inward 3,50,000 Stock at the end 31,00,000 Gross Profit c/d 36,00,000 2,13,50,000 2,13,50,000 Depreciation on Furniture 1,00,000 Gross Profit b/d 36,00,000 Salaries 12,50,000 Rent 5,00,000 Advertisement 3,00,000 Telephone Charges 1,50,000 Office Expenses 50,000 H.O. Expenses 50,000 Profit and Loss Account 12,00,000 36,00,000 36,00,000 Incorporation Journal Entries (i) Branch Trading Account Dr. 1,77,50,000 To Branch Account 1,77,50,000 [Being incorporation of opening stock (30,00,000) Goods received from H.O. (1,44,00,000) and Carriage inward (3,50,000)] (ii) Branch Account Dr. 2,13,50,000 To Branch Trading Account 2,13,50,000 (Being incorporation of Goods returned to H.O. and sales at the branch and stock at the end i.e., 2,50, ,80,00, ,00,000)

5 (iii) Branch Trading Account Dr. 36,00,000 To Branch Profit and Loss Account 36,00,000 (Gross Profit at the branch) (iv) Branch Profit and Loss Account Dr. 24,00,000 To Branch Account 24,00,000 Incorporation of depreciation on furniture, salaries, rent, advertisement expenses, telephone charges, office expenses, and H.O. expenses (i.e., 1,00, ,50, ,00, ,00, ,50, , ,000) (v) Branch Profit and Loss Account Dr. 12,00,000 To General Profit and Loss Account 12,00,000 (Net Profit at the branch incorporated in the General profit and loss acccount) (vi) Branch Furniture Account Dr. 9,00,000 Branch Debtors Account Dr. 10,00,000 Branch Cash Account Dr. 4,00,000 Branch Stock Account Dr. 31,00,000 To Branch Account 54,00,000 Incorporation of branch assets) (vii) Branch Account Dr. 1,50,000 To Branch Outstanding Expenses Account 1,50,000 (Incorporation of branch liability) (viii) Good in Transit Account Dr. 5,00,000 To Branch Account 5,00,000 (Goods in tansit incorporated) (ix) Branch Account Dr. 50,000 To H.O. Profit and Loss Account 50,000 (H.O. expenses charged to branch)