Give Journal Entries in the books of Branch A to rectify or adjust the following: (i) Head Office expenses - 3,500 allocated to the Branch, but not…

CA Intermediate · Advanced Accounting · MTP · January 2025
Give Journal Entries in the books of Branch A to rectify or adjust the following: (i) Head Office expenses - 3,500 allocated to the Branch, but not recorded in the Branch Books. (ii) Depreciation of branch assets, whose accounts are kept by the Head Office not provided earlier for 1,500. (iii) Branch paid - 2,000 as salary to a H.O. Inspector, but the amount paid has been debited by the Branch to Salaries account. (iv) H.O. collected - 10,000 directly from a customer on behalf of the Branch, but no intimation to this effect has been received by the Branch. (v) A remittance of 15,000 sent by the Branch has not yet been received by the Head Office. (vi) Branch A incurred advertisement expenses of 3,000 on behalf of Branch B.

Suggested Answer and Working Notes:

Books of Branch A Journal Entries Particulars Dr. Amount ₹ Cr. Amount ₹ (i) Expenses account Dr. 3,500 To Head office account 3,500 (Being the allocated expenditure by the head office recorded in branch books) (ii) Depreciation account Dr. 1,500 To Head office account 1,500 (Being the depreciation provided) (iii) Head office account Dr. 2,000 To Salaries account 2,000 (Being the rectification of salary paid on behalf of H.O.) (iv) Head office account Dr. 10,000 To Debtors account 10,000 (Being the adjustment of collection from branch debtors) (v) No entry in branch books (vi) Head Office account Dr. 3,000 To Cash account 3,000 (Being the expenditure on account of Branch B, recorded in books) Note: Entry (vi) Inter branch transactions are routed through Head Office.

Topics: Accounting for Branches including foreign branch

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