Advanced Financial Accounting FIN-611 Mian Ahmad Farhan Lecture-16 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

Head Office A/c Balance b/f Balance c/f 3,240 460 Goods in transit 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 Branch A/c 1,000 Advertisement A/c 1,000 Advertisement A/c 1,000 Head office A/c 1,000 Provision for dep. A/c 500 Head office A/c 500 Branch A/c 500 Provision for dep. A/c 500

Murree Branch A/c Balance b/f Advertisement Depreciation Exp. 460 1,000 500 Balance c/f 1,960

Head Office A/c Balance c/f 1,960 Balance b/f Advertisement Depreciation Exp. 460 1,000 500

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 3,700 Murree branch furniture A/c 6,000 Murree branch debtors A/c 3,700 Murree branch stock A/c 7,700 Murree branch cash A/c 1,780 Murree branch A/c 22,880 Incorporation of branch Liabilities Murree branch A/c 1,850 Murree branch creditors A/c 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 3,700 Murree branch furniture A/c 6,000 Murree branch debtors A/c 3,700 Murree branch stock A/c 7,700 Murree branch cash A/c 1,780 Murree branch A/c 22,880 Incorporation of branch Liabilities Murree branch A/c 1,850 Murree branch creditors A/c 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 A 16,000 x3/5 B 16,000 x 2/5 9,600 6,400 43,600 24,600 ---

Balance sheet Murree Branch A/c As at 31st December,2007 Liabilities Amount Assets Head office Opening balance (Cr) 460 Add profit (Cr) 20,570 Creditors 21,030 1,850 Fixed Assets Furniture Closing stock Debtors Goods in transit Cash at bank 6,000 7,700 3,700 1,780 1,960

Balance sheet Murree Branch A/c As at 31st December,2007 Liabilities Amount Assets Balance b/f 460 Add Advertisement 1,000 Depreciation 500 Profit & Loss Creditors 1,960 19,070 1,850 Fixed Assets Furniture Closing stock Debtors Goods in transit Cash at bank 6,000 7,700 3,700 1,780