1. Advanced Financial Accounting FIN-611
Mian Ahmad Farhan
Lecture-14
Branch Accounting

2. Stock & Debtor System

3. Branch stock account
Branch debtors account
Goods sent to branch account
Branch stock reserve account
Branch expenses account
Branch adjustment account
Branch profit & loss account

4. Journal Entries Goods sent to branch Goods sold by branch
Branch stock A/c xxx
Goods sent to branch A/c xxx
(Invoice price)
Goods sold by branch
A- Cash sales
Branch cash A/c xxx
B- Credit sales
Branch debtors A/c xxx
Branch stock A/c xxx

5. Journal Entries Cash received from debtor Goods returned by customer
Cash A/c xxx
Branch debtors A/c xxx
Goods returned by customer
Branch stock A/c xxx
Goods sent to branch A/c xxx
Bad debts and Discount debtors
Branch Exp. A/c
Branch debtors A/c

6. Bad debts
Bad debts A/c
Debtors A/c

7. Branch Debtors Account
Opening balance b/f
Branch stock
(Credit sales)
xxx
Cash
(Cash received from debtors)
Branch Exp.
(Bad debts )
(Discount allowed)
(Stock return)
Closing balance

8. Journal Entries Branch return goods HO Goods sent to branch A/c xxx
Branch stock A/C xxx
(Invoice price)
Stock theft
Branch adjustment A/c xxx
Branch stock A/c xxx
Cash sent by HO to branch for expenses
Branch Exp. xxx
Cash / Bank A/c xxx

9. Branch stock Opening balance (Invoice price) Goods sent to branch xxx
Branch debtors /cash (Sales of goods)
Branch debtors
(Sales return)

10. Branch Expenses Branch debtors (Bad debts) (Discount on debtors)
Cash/Bank
(Cash sent to branch for expenses)
xxx
Balance (Transfer to branch adjustment A/c)

11. Journal Entries Transfer branch exp. to branch adjustment A/c
Branch adjustment A/c xxx
Branch Exp. A/c xxx
Surplus in Branch stock
Branch stock A/c xxx

12. Branch Stock Account Goods send to branch Balance 120 30
Branch debtors
150

13. Cash send to branch for expenses Branch Exp. xxx Bank / Cash xxx
Branch Expenses
Balance
Branch Adjustment A/c
Branch Exp.

14. Transfer of Branch Exp. to branch adjustment account
Branch adjustment xxx
Branch Exp. xxx

15. Branch stock account
Branch debtors account
Branch expenses account

16. Branch adjustment account
Branch stock reserve account
Goods sent to branch account

17. Goods Sent to Branch Account
Branch stock
(Goods return invoice price)
Branch adjustment
Balance (Profit)
1,000
8,000
32,000
(Goods return at invoice price)
50,000
First right side then one by one left side

18. Goods sent to branch cost plus 25%.
Loading = 40,000 / 125 x 25 = 8,000
Cost of goods sent to branch = 40,000 – 8,000 = 32,000
Goods sent to branch A/c 8,000
Branch adjustment A/c 8,000
Goods sent to branch 32,000
Purchases ,00

19. Branch Stock Opening stock (Invoice price) 3,000 Closing stock 5,000
50,000

20. Branch Stock Reserve Closing stock reserve 1,000 (Invoice price)
Balance
5,000
400

21. Loading = 3,000 / 125 x 25 = 600

22. Branch Adjustment Account
Branch stock reserve (Opening)
Goods sent to branch
600
8,000
Branch stock reserve A/c
Branch Adjustment A/c

23. Sales
Surplus
Invoice
Cost
Loading

24. Branch Adjustment A/c 1,000
Stock reserve A/c 1,000

25. Branch Adjustment Account
Branch expenses
Shortage
Closing stock reserve
Profit
xxx
Opening stock reserve
Goods sent to branch (Loading)
Surplus
Loss

26. Working Opening stock 2,400 / 133.333 x 33.333 = 600
Goods sent o branch
72,000 / x = 18,000
Closing stock
12,000 / x = 3,000