From the following particulars relating to Pune branch for the year ending December 31, 2024, prepare Branch Account in the books of Head office.…

CA Intermediate · Advanced Accounting · RTP · September 2024
From the following particulars relating to Pune branch for the year ending December 31, 2024, prepare Branch Account in the books of Head office. Particulars ₹ Stock at Branch on January 1, 2024 10,000 Branch Debtors on January 1, 2024 4,000 Branch Debtors on Dec. 31, 2024 4,900 Petty cash at branch on January 1, 2024 500 Furniture at branch on January 1, 2024 2,000 Prepaid fire insurance premium on January 1, 2024 150 Salaries outstanding at branch on January 1, 2024 100 Good sent to Branch during the year 80,000 Cash Sales during the year 1,30,000 Credit Sales during the year 40,000 Cash received from debtors 35,000 Cash paid by the branch debtors directly to the Head Office 2,000 Discount allowed to debtors 100 Cash sent to branch for Expenses: Rent 2,000 Salaries 2,400 Petty Cash 1,000 Annual Insurance up to March 31, 2025 600 Goods returned by the Branch 1,000 Goods returned by the debtors 2,000 Stock on December 31,2024 5000 Petty Cash spent by branch 850 Provide depreciation on furniture 10% p.a. Goods costing - 1,200 were destroyed due to fire and a sum of 1,000 was received from the Insurance Company.

Suggested Answer and Working Notes:

Pune Branch Account Particulars ₹ Particulars ₹ To Opening Balance: By Opening Balance: Stock 10,000 Salaries outstanding 100 Debtors 4,000 By Remittances: Petty Cash 500 Cash sales 1,30,000 Furniture 2,000 Cash received from debtors 35,000 Prepaid Insurance 150 Cash paid by debtors directly to H.O. 2,000 To Goods sent to Branch Account 80,000 Received from Insurance Company 1,000 1,68,000 To Bank (expenses) By Goods sent to branch (return of goods by the branch to H.O.) 1,000 Rent 2,000 By Closing Balances: Salaries 2,400 Stock 5,000 Petty Cash 1,000 Petty Cash 650 Insurance 600 Debtors 4,900 6,000 Furniture (2,000 - 10% depreciation) 1,800 To Net Profit 78,950 Prepaid insurance (1/4 x 600) 150 1,81,600 1,81,600 Working Note: Calculation of petty cash balance at the end: Particulars ₹ Opening balance 500 Add: Cash received form the Head Office 1,000 Total Cash with branch 1,500 Less: Spent by the branch 850 Closing balance 650

Topics: Accounting for Branches including foreign branch

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