Jolly Industries of Delhi is a trader in spices. It has a branch at Jalandhar to which Head office invoice goods at 20% on sales. The Jalandhar…

CA Intermediate · Advanced Accounting · MTP · May 2026
Jolly Industries of Delhi is a trader in spices. It has a branch at Jalandhar to which Head office invoice goods at 20% on sales. The Jalandhar branch sells spices both on cash and credit. Branch remit all the cash received to Head Office Bank account, thus all expenses of branch are also directly paid from head office. From the following information given, Prepare Branch Accounts in the Head office ledger using Stock and Debtors Method. Branch does not maintain any books of account, but send fortnightly returns to Head office. Particulars ₹ Stock at Jalandhar as on 1st April, 2025 (Cost Price) 1,00,000 Sundry Debtors at Jalandhar as on 1st April, 2025 1,10,000 Cash received from Debtors 3,45,000 Bad debts during the year 9,500 Discount allowed to Debtors 5,500 Goods received from Head Office at Invoice Price 6,00,000 Returns to Head office at Invoice Price 60,000 Normal loss of goods during transport (Out of Goods sent by H.O. to Branch) 12,000 Sales returns at Jalandhar Branch 11,000 Salaries and staff welfare expenses at Branch 54,000 Rent and taxes at Branch 9,000 Other Office Expenses 2,500 Sundry Debtors at Branch as at 31st March 2026 1,55,000 Stock at Jalandhar as on 31st March, 2026 (Cost Price) 1,20,000 Credit sales at Branch are four times of the cash Sales at Branch.

Suggested Answer and Working Notes:

Books of Jolly Industries, Delhi Jalandhar Branch Stock Account Particulars ₹ Particulars ₹ To Balance b/d – Op Stock 1,25,000 By Bank A/c – Cash Sales 1,04,000 To Branch Debtors A/c – Sales Return 11,000 By Branch Debtors A/c – Credit Sales 4,16,000 To Goods sent to Branch A/c (6,00,000 +12,000) 6,12,000 By Goods sent to Branch (Returns to H.O.) 60,000 By Branch Stock Adjustment A/c (Normal Loss) 12,000 By Branch Stock Adjustment A/c (Abnormal Loss) (bal. fig.) 6,000 By Balance c/d – Closing stock 1,50,000 7,48,000 7,48,000 Jalandhar Branch Stock Adjustment Account Particulars ₹ Particulars ₹ To Goods sent to Branch A/c (1/5 of 60,000) (on returns) 12,000 By Balance b/d (20% of 1,25,000) 25,000 To Branch Stock A/c (abnormal Loss) (6,000 x 1/5) 1,200 By Goods sent to Branch A/c (1/5 of 6,12,000) 1,22,400 To Branch Stock A/c (Normal Loss) 12,000 To Balance c/d (1/5 of 1,50,000) 30,000 To Branch P & L A/c (Profit on sale) – Bal fig 92,200 1,47,400 1,47,400 Goods Sent to Branch Account Particulars ₹ Particulars ₹ To Jalandhar Branch Stock Adjustment A/c 1,22,400 By Jalandhar Branch Stock A/c 6,12,000 To Jalandhar Branch Stock A/c (Returns) 60,000 By Jalandhar Branch Stock Adj. A/c 12,000 To Purchases A/c 4,41,600 6,24,000 6,24,000 Branch Debtors Account Particulars ₹ Particulars ₹ To Balance b/d 1,10,000 By Bank 3,45,000 To Branch Stock A/c 4,16,000 By Branch P&L A/c - Discount 5,500 By Branch P&L A/c - Bad Debts 9,500 By Branch Stock - Sales Returns 11,000 By Balance c/d 1,55,000 5,26,000 5,26,000 Branch Expenses Account Particulars ₹ Particulars ₹ To Bank A/c (Rent & Taxes) 9,000 By Branch Profit & Loss A/c (Transfer) 65,500 To Bank A/c (Salaries & Staff Welfare expenses) 54,000 To Bank A/c (office exp.) 2,500 65,500 65,500 Branch Profit & Loss Account for the year ending 31st March 2026 Particulars ₹ Particulars ₹ To Branch Expenses A/c 65,500 By Branch Stock Adj. A/c 92,200 To Branch Debtors A/c 5,500 To Branch Debtors A/c 9,500 To Abnormal Loss (cost) 4,800 To Net Profit transferred to Profit & Loss A/c 6,900 92,200 92,200

Topics: Accounting for Branches including foreign branch

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