Following is the information of Kullu Branch of M/s Best Enterprises of Shimla for the year ending 31st March 2023 : (1) Goods are invoiced to the…

CA Intermediate · Advanced Accounting · PYQS · September 2024
Following is the information of Kullu Branch of M/s Best Enterprises of Shimla for the year ending 31st March 2023 : (1) Goods are invoiced to the branch at cost plus 20% (2) Branch sold goods at invoice price plus 25%. (3) Other Information is as follows: (i) Stock (at cost price) as on 1st April, 2022 is 2,25,000 (ii) Goods sent by Head office to branch during the year (at cost price) are - 14,85,000 (iii) Goods returned by Branch to Head office during the year (at Invoice price) are - 75,000 (iv) Sales by the branch during the year 19,50,000 (v) Expenses incurred at Branch - 56,000. You are required to ascertain the following: (a) Profit earned by the Branch by Preparing Trading and profit and loss account for the year ended 31st March 2023 (b) Also find the stock reserve on Closing stock (4 + 6 + 6 = 14 Marks)

Suggested Answer and Working Notes:

(i) In the books of Kullu Branch Trading and Profit and Loss Account Particulars Amount ₹ Particulars Amount ₹ To Opening stock 2,70,000 By Sales 19,50,000 To Goods received by Head office 17,82,000 By Goods returned by Branch 75,000 To Expenses 56,000 By Closing stock (Refer W.N.) 4,17,000 To Net profit (Bal fig) 3,34,000 24,42,000 24,42,000 (ii) Calculation of Closing Stock Cost price 100 Invoice price 120 (100+20) Sales price 150 (120+25% of 120) Opening Stock 2,70,000 Goods received 17,82,000 Less: Goods Returned 75,000 19,77,000 Less: Cost of Goods Sold (Invoice price) 15,60,000 Closing Stock 4,17,000 Stock reserve in respect of unrealised profit = 4,17,000 x (20/120) = 69,500

Topics: Accounting for Branches including foreign branch

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