Give Journal Entries (with Narrations) in the books of an Independent Branch of a business entity to rectify or adjust the following: (i) Commission…

CA Intermediate · Advanced Accounting · PYQS · January 2025
Give Journal Entries (with Narrations) in the books of an Independent Branch of a business entity to rectify or adjust the following: (i) Commission (income) of 7,500 allocated to Branch by Hand office but still no entry is passed in the books of branch. (ii) Head office paid - 12,000 directly to one of branch's supplier. The intimation is received by branch on reconciliation of bank statement of branch with its books. (iii) A remittance of 85,000 is sent by branch to Head office has not been received by Head office till date. (iv) Branch paid - 9,800 as salary to Head office's employee, but the amount paid has been wrongly debited to salary account. (v) Branch purchased Furniture for 18,000 through cheque, but the Furniture account was retained in Head office Books. No entry has yet been passed. (vi) Branch incurred - 5,500 of expenses on behalf of other branches of head office, this transaction was not recorded in the books of branch.

Suggested Answer and Working Notes:

In the books of Branch Journal Entries Particulars ₹ ₹ 1) Head office account Dr. 7,500 To Commission Income (Being commission income recognized) 7,500 2) Creditors A/c Dr. 12,000 To Head office account (Being H.O. paid off a creditor directly) 12,000 3) No entry in Branch Books 4) Head office account Dr. 9,800 To Salary A/c (Being amount debited to salary account by mistake now rectified) 9,800 5) Head office account Dr. 18,000 To Bank A/c (Being furniture purchased by branch retained by H.O.) 18,000 6) Head Office A/c Dr. 5,500 To Bank A/c (Being expenses incurred on behalf of other branches, due from H.O.) 5,500

Topics: Accounting for Branches including foreign branch

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