Following is the Trial Balance as on 31 st December, 2025 of the Cambridge Branch of Harry Limited whose Head Office is situated at Pune, India. Dr…

CA Intermediate · Advanced Accounting · RTP · May 2026
Following is the Trial Balance as on 31 st December, 2025 of the Cambridge Branch of Harry Limited whose Head Office is situated at Pune, India. Dr € Cr € Furniture 80,000 Stock as on 1 st January, 2024 36,000 Debtors 16,000 Cash at Bank 3,000 Head Office A/c 80,000 Creditors 12,000 Sales 2,80,000 Expenses 12,000 Goods sent from Head Office 3,72,000 Total 3,72,000 3,72,000 In the books of Head Office, the Branch Account stood as under: Cambridge Branch Account ₹ in Lakhs ₹ in Lakhs To Balance b/d 27.00 By Bank 146.00 To Goods sent to Branch 180.00 By Balance c/d 61.00 207.00 207.00 Additional Information: Good are sent to the branch at cost plus 10% and the branch sells goods at invoice price plus 25%.Furniture was acquired on 1 st April, 2023 when €1.00 = 84. Furniture is depreciated at 10%.The Branch Manager is entitled to a commission of 10% on the profits of the branch before charging such commission.Rates of Exchange were on 1 st January, 2025 €1.00 = 91, on 31 st December, 2025 €1.00 = 89 and Average €1.00 = 86. You are required to: (i) Prepare the Branch Trading and Profit & Loss Account in Euros. (ii) Convert the Trial Balance of the Branch in Indian Currency.

Suggested Answer and Working Notes:

Cambridge Branch Trading and Profit & Loss Account for the year ended 31 st December, 2025 Particulars € Particulars € To Opening Stock 36,000 By Sales 2,80,000 To Goods sent from H.O. 2,25,000 By Closing Stock 37,000 To Gross Profit c/d 56,000 3,17,000 3,17,000 To Expenses 12,000 By Gross Profit b/d 56,000 To Depreciation 8,000 To Manager's Commission 3,600 To Net Profit c/d 32,400 56,000 56,000 Converted Trial Balance (into Indian Currency) of Cambridge Branch Particulars Rate per € Dr. (₹ in Lakhs) Cr. (₹ in Lakhs) Furniture 84 67.20 Stock as on 1 st January 2024 91 32.76 Debtors 89 14.24 Cash at Bank 89 2.67 Head Office A/c Actual 61.00 Creditors 89 10.68 Sales 86 240.80 Expenses 86 10.32 Goods from Head Office Actual 180.00 Exchange Difference in rate 5.29 Total 312.48 312.48 Closing Stock €37,000 @ 89 = 32.93 Working Notes: 1. Calculation of Closing Stock and COGS Particulars € Opening Stock 36,000 Add: Goods from Head Office 2,25,000 2,61,000 Less: Cost of Goods sold (at invoice price) €2,80,000 x 100/125 = €2,24,000 2,24,000 Closing Stock 37,000 2. Calculation of Manager's Commission @ 10% of Profit 10% of (Euro 56,000 - Euro 12,000 - Euro 8,000) = 10% of Euro 36,000 = Euro 3,600

Topics: Accounting for Branches including foreign branch

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