Advanced financial accounting - Lecture 16: Branch accounting (Whole sale branch)
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Advanced Financial
Accounting
FIN611
Mian Ahmad Farhan
Lecture16
Branch Accounting (Whole sale
branch)
Question & Solution
in Word Format
Reconciliation
Branch Book
Goods in transit A/c 3,700
Head office A/c 3,700
Murree Branch A/c
Balance b/f 460
Balance c/f
460
Head Office A/c
Balance b/f
Balance c/f
3,240
460
3,700
Goods in
transit
3,700
3,700
Additional Information
Advertisement expenses allocated by HO Rs. 1,000
Depreciation charged by HO on branch equipments
@10% using straight line method.
Journal Entry
Head office
Branch A/c 1,000
Advertisement A/c 1,000
Branch A/c 500
Provision for dep. A/c 500
Branch
Advertisement A/c 1,000
Head office A/c 1,000
Provision for dep. A/c 500
Head office A/c 500
Murree Branch A/c
Balance b/f
460
Advertisement
1,000
Depreciation Exp. 500
1,960
Balance c/f
1,960
1,960
Head Office A/c
Balance c/f
1,960
1,960
Balance b/f
Advertisement
Depreciation Exp.
460
1,000
500
1,960
Journal Entry (HO Book)
Incorporation of branch net profit
Murree branch A/c 20,570
Profit & Loss A/c 20,570
Incorporation of branch Assets
Murree branch goods in transit A/c
Murree branch furniture A/c
Murree branch debtors A/c
Murree branch stock A/c
Murree branch cash A/c
Murree branch A/c
6,000
3,700
Incorporation of branch Liabilities
Murree branch A/c
Murree branch creditors A/c
3,700
7,700
1,780
22,880
1,850
1,850
Journal Entry (HO Book)
Incorporation of branch net profit
Murree branch A/c 19,070
Profit & Loss A/c 19,070
Incorporation of branch Assets
Murree branch goods in transit A/c
Murree branch furniture A/c
Murree branch debtors A/c
Murree branch stock A/c
Murree branch cash A/c
Murree branch A/c
6,000
3,700
Incorporation of branch Liabilities
Murree branch A/c
Murree branch creditors A/c
3,700
7,700
1,780
22,880
1,850
1,850
Partnership
A
B
Total
Net Profit
70,000
Interest on
capital
10,000
20,000
(30,000)
Partner salary
24,000
(24,000)
16,000
(16,000)
Profit sharing
9,600
6,400
16,000
43,600
24,600
A 16,000 x3/5
B 16,000 x 2/5
Balance sheet
Murree Branch A/c
As at 31st December,2007
Liabilities
Amount
Assets
Head office
Fixed Assets
Opening balance (Cr) 460
Add profit (Cr) 20,570
21,030
1,850
Creditors
1,960
Furniture
Closing stock
Debtors
Goods in transit
Cash at bank
Amount
6,000
7,700
3,700
3,700
1,780
1,960
Balance sheet
Murree Branch A/c
As at 31st December,2007
Liabilities
Balance b/f 460
Add Advertisement 1,000
Depreciation 500
Profit & Loss
Creditors
Amount
1,960
19,070
1,850
1,960
Assets
Fixed Assets
Amount
Furniture
Closing stock
Debtors
Goods in transit
Cash at bank
6,000
7,700
3,700
3,700
1,780
1,960
