Branch Accounts Part- II Dependant Branches Debtors System Method.pptx

Branch accounting is a bookkeeping system in which separate accounts are kept for each branch or operating location of an organization. Technically, the branch account is a temporary or nominal ledger account, lasting for a designated accounting period.

1. Branch Accounts Part- II Dependant Branches Debtors System Method Presented By Dr. N.Renuka Devi Associate Professor Department of Bank Management Ethiraj College for Women Chennai

2. Branch Accounts Part- II Dependant Branches Debtors System Method Type - 1 When Goods a re sent at Cost price

3. Presented By Dr. N. Renuka Devi Associate Professor Department of Bank Management Ethiraj College for Women Chennai

4. TYPE 1 DEPENDENT BRANCHES DEBTORS SYSTEM METHOD WHEN GOODS ARE SENT TO BRANCH AT COST PRICE

5. Branch having Cash Sales Only EX 2 Pg. No. 16.57 - R&M

6. In the Books of the Head Office (R.N. Swamy & Co.) Neyvelli Branch A/C for the year ended 30.6.1996 To Opening bal b/d Stock 45,000 By Bank (Remmittance) 1,80,000 ToGoods sent to Branch 1,35,000 By Closing Bal c/d Stock 2,500 20 To Bank: Salaries Other Expenses 15,000 6,000 To Commission (5%) 9,000 To Profit transfered to General P&L A/C 2,900 57,520 57,520

7. HW - EX 3, Pg- 16.57 R&M

8. When Goods are sold at Credit

9. In the Books of the Head Office (Good Luck Ltd.) Calcutta Branch A/C for the year ended 31.12.1995 To Goods sent to Branch 50,000 By Bank (Remmittance) 52,000 To Bank: Expenses 7,000 By Closing Bal c/d Stock Debtors 8,000 3,400 To Profit transfered to General P&L A/C 6,400 63,400 63,400

10. JOURNAL ENTRIES CASH A/C DR 20,000 TO SALES A/C 20,000 (Being Cash Sales) DEBTORS A/C DR 36,000 TO SALES A/C 36,000 (Being Credit Sales) CASH A/C DR 32,000 TO DEBTORS A/C 32,000 (Being Cash received from Debtors) DISCOUNT ALLOWED A/C DR 600 TO DEBTORS A/C 600 (Being Discount allowed to drs)

11. Debtors A/C To Sales ( Credit ) 36,000 By Cash 32,000 By Disct Allowed 600 By Bal c/d 3,400 36,000 36,000

12. Cash remitted by Branch to Head Office Cash Sales = 20,000 Cash received from Debtors = 32,000 52 ,000

13. HW - EX 4, Pg- 16.57 R&M

14. In the Books of the Head Office Bombay Branch A/C for the year ended 31.12.1993 To Bal b/d Stock Debtors Petty Cash 15,000 30,000 300 To Goods returned by Branch 2,000 To Goods sent to Branch 2,52,000 By Bank (Remmittance) 2,70,000 To Bank: Salaries Rent & Taxes Petty Cash 9,000 1,500 1,100 By Closing Bal c/d Stock Debtors Petty Cash 25,000 48,000 200 To Profit transfered to General P&L A/C 36,300 3,45,200 3,45,200

15. In the Books of the Head Office Madurai Branch A/C for the year ended 31.12.1994 To Bal b/d Stock Debtors Petty Cash 30,000 12,000 200 To Goods returned by Branch to HO 600 To Goods sent to Branch 50,000 By Bank (Remmittance) 83 ,400 To Bank: Expenses Petty Cash 3,000 500 By Closing Bal c/d Stock Petty Cash 12,500 300 To Profit transfered to General P&L A/C 1 ,100 96,8 00 96,800

16. JOURNAL ENTRIES CASH A/C DR 30,000 TO SALES A/C 30,000 (Being Cash Sales) DEBTORS A/C DR 42,000 TO SALES A/C 42,000 (Being Credit Sales) SALES RETURN A/C DR 300 TO DEBTORS A/C 300 (Being Sales Return) BAD DEBTS A/C DR 600 TO DEBTORS A/C 600 (Being Bad debts to drs) CASH A/C DR 53,400 TO DEBTORS A/C 53,400 (Being Cash received from Debtors)

17. Debtors A/C To Bal b/d 12,000 By Cash ( b f ) 5 3,400 To Sales (Credit) 42,000 By Bad Debt 3 00 By Sales Return 300 By Bal c/d nil 54,000 54,000

18. Cash Collections remitted by Branch to Head Office Cash Sales = 3 0,000 Cash received from Debtors = 5 3 , 4 00 83 , 4 00

19. HW - EX 7, Pg- 16.59 R&M

20. In the Books of the Head Office (Indian Traders) Baroda Branch A/C for the year ended 31.12.1988 To Goods sent to Branch 75,000 By Bank (Remmittance) 1,05,000 To Bank: Salaries Office Expenses Petty Cash 15,000 12,000 6,000 By Closing Bal c/d Stock Petty Cash Debtors 27,000 500 5,000 To Profit transfered to General P&L A/C 29 ,500 1,37,500 1,37,500

21. Debtors A/C To Sales (Credit) 60,000 By Cash ( b f ) 55,000 By Bad Debt - By Sales Return - By Bal c/d 5,000 60,000 60,000

22. Cash Collections remitted by Branch to Head Office Cash Sales = 50,000 Cash received from Debtors = 55,000 1,05,000

23. In the Books of the Head Office Trichy Branch A/C for the year ended 31.12.1992 To Bal b/d Stock Debtors Petty Cash 30,000 12,000 200 To Goods returned by Branch to HO 600 To Goods sent to Branch 50,000 By Bank (Remmittance) 82,350 To Bank: Expenses Petty Cash 3,000 500 By Closing Bal c/d Stock Petty Cash Furniture 12,500 300 1,000 To Profit transfered to General P&L A/C 1 ,050 96,75 96,750

24. JOURNAL ENTRIES CASH A/C DR 30,000 TO SALES A/C 30,000 (Being Cash Sales) DEBTORS A/C DR 42,000 TO SALES A/C 42,000 (Being Credit Sales) SALES RETURN A/C DR 250 TO DEBTORS A/C 250 (Being Sales Return) BAD DEBTS A/C DR 300 DISCT ALLOWED A/C DR 100 TO DEBTORS A/C 400 (Being Bad debts & Disct allowed to drs) CASH A/C DR 53,400 TO DEBTORS A/C 53,400 (Being Cash received from Debtors)

25. 6. Furniture A/c Dr 1,000 To Cash A/c 1000 ( Being Furniture purchased by Branch)

26. Debtors A/C To Bal b/d 12,000 By Cash ( b f ) 53,350 To Sales (Credit) 42,000 By Bad Debt 300 By Disct Allowed 100 By Sales Return 250 By Bal c/d nil 54,000 54,000

27. Petty Cash A/C (In the books of Branch) To Bal b/d 200 By Petty Exp 400 To H O 5 500 By Bal c/d 300 700 700

28. JOURNAL ENTRIES PETTY CASH A/C DR 500 TO HO A/C 500 (Being Petty Cash received from HO) PETTY EXPENSES A/C DR 400 TO PETTY CASH A/C 400 (Being Petty exp met at Branch) Furniture A/C Dr. 1000 To Br Cash A/C 1000 (Being purchase of furniture)

29. Cash Collections remitted by Branch to Head Office Cash Sales = 30,000 Cash received from Debtors = 53,350 83,350 Less: Cash for Purchase of Furniture = 1,000 82,350

30. In the Books of the Head Office Branch A/C for the year ended XXXX To Opening bal b/d Stock 45,000 By Bank (Remmittance) 1,80,000 ToGoods sent to Branch 1,35,000 By Closing Bal c/d Stock 30,000 To Bank: Salaries Other Expenses 15,000 6,000 To Commission (5%X900) 450 To Profit transfered to General P&L A/C 8,550 2,10,000 2,10,000

31. OPENING STOCK + PURCHASES - CLOSING STOCK = COST OF GOODS SOLD COMPUTATION OF CLOSING STOCK Opening Stock = 45,000 Add: Goods sent to Branch = 1,35,000 1,80,000 Less: Cost of Goods sold (Salesx 100/120) = 1,50,000 Closing Stock 30,000

32. CP +P=SP 100 +20=120 SP - CP 120 - 100 180000 - ? 180000X 100 = 1,50,000 120

33. Branch Debtors A/C To Bal b/d 14,000 By Cash 1,3 5,000 To Sales (Credit) 1,83,000 By Discount 1,100 By Sales Return 7,000 By Cash (paid to HO ) 22,000 By Bal c/d (B/F) 31 ,900 1,97,000 1,97,000

34. Branch Petty Cash A/C To Bal b/d 1,500 By Petty Exp 2,850 To H O 4,0 00 By Bal c/d (b/f) 2,650 5,5 00 5,500

35. JOURNAL ENTRIES PETTY CASH A/C DR 4,000 TO HO A/C 4,000 (Being Petty Cash received from HO) PETTY EXPENSES A/C DR 2,850 TO PETTY CASH A/C 2,850 (Being Petty exp met at Branch)

36. Cash Collections remitted by Branch to Head Office Cash Sales = 3,30,000 Direct paid to HO = 22,000 Cash received from Debtors = 1,35,000 4,87,000

37. EX 11, Pg- 16.60 R&M

38. Branch Debtors A/C To Bal b/d 10,000 By Cash 6 5,000 To Sales (Credit) 61 ,500 By Discount 5 00 By Sales Return 1000 By Cash (paid to HO ) 5,000 71,500 71,500

39. Branch Petty Cash A/C To Bal b/d 1,000 By Petty Exp 2,200 To H O 2 ,000 By Bal c/d (b/f) 800 3 ,000 3 ,000

40. JOURNAL ENTRIES PETTY CASH A/C DR 2,000 TO HO A/C 2,000 (Being Petty Cash received from HO) PETTY EXPENSES A/C DR 2,200 TO PETTY CASH A/C 2,200 (Being Petty exp met at Branch) Bank A/C Dr. 2,000 To Insurance Co. 2,000 (Being Insurance money received for compensating damaged tostock)

41. Cash Collections remitted by Branch to Head Office Cash Sales = 2,70,000 Direct paid to HO = 5,000 From Insurance Co. = 2000 Cash received from Debtors = 65,000 3,42,000

42. Loading Process Goods are supplied at IP, therefore Opening Stock, Goods sent to Branch, Goods returned by Branch and Closing stock will be recorded at IP. Hence in order to find out the true profit or loss at Branch ,it will be necessary to eliminate the loading or profit added and bring down these items to cost level. For this purpose adjustments have to be made in the Branch A/C

43. Cost + 20% is For Cost + Profit = SP 100 + 20 = 120 Therefore Profit on Sales = 20/120

44. Thank You