Advanced Financial Accounting FIN-611 Mian Ahmad Farhan Lecture-14 Branch Accounting

Stock & Debtor System

Branch stock account Branch debtors account Goods sent to branch account Branch stock reserve account Branch expenses account Branch adjustment account Branch profit & loss account

Journal Entries Goods sent to branch Goods sold by branch Branch stock A/c xxx Goods sent to branch A/c xxx (Invoice price) Goods sold by branch A- Cash sales Branch cash A/c xxx B- Credit sales Branch debtors A/c xxx Branch stock A/c xxx

Journal Entries Cash received from debtor Goods returned by customer Cash A/c xxx Branch debtors A/c xxx Goods returned by customer Branch stock A/c xxx Goods sent to branch A/c xxx Bad debts and Discount debtors Branch Exp. A/c Branch debtors A/c

Bad debts Bad debts A/c Debtors A/c

Branch Debtors Account Opening balance b/f Branch stock (Credit sales) xxx Cash (Cash received from debtors) Branch Exp. (Bad debts ) (Discount allowed) (Stock return) Closing balance

Journal Entries Branch return goods HO Goods sent to branch A/c xxx Branch stock A/C xxx (Invoice price) Stock theft Branch adjustment A/c xxx Branch stock A/c xxx Cash sent by HO to branch for expenses Branch Exp. xxx Cash / Bank A/c xxx

Branch stock Opening balance (Invoice price) Goods sent to branch xxx Branch debtors /cash (Sales of goods) Branch debtors (Sales return)

Branch Expenses Branch debtors (Bad debts) (Discount on debtors) Cash/Bank (Cash sent to branch for expenses) xxx Balance (Transfer to branch adjustment A/c)

Journal Entries Transfer branch exp. to branch adjustment A/c Branch adjustment A/c xxx Branch Exp. A/c xxx Surplus in Branch stock Branch stock A/c xxx

Branch Stock Account Goods send to branch Balance 120 30 Branch debtors 150

Cash send to branch for expenses Branch Exp. xxx Bank / Cash xxx Branch Expenses Balance Branch Adjustment A/c Branch Exp.

Transfer of Branch Exp. to branch adjustment account Branch adjustment xxx Branch Exp. xxx

Branch stock account Branch debtors account Branch expenses account

Branch adjustment account Branch stock reserve account Goods sent to branch account

Goods Sent to Branch Account Branch stock (Goods return invoice price) Branch adjustment Balance (Profit) 1,000 8,000 32,000 (Goods return at invoice price) 50,000 First right side then one by one left side

Goods sent to branch cost plus 25%. Loading = 40,000 / 125 x 25 = 8,000 Cost of goods sent to branch = 40,000 – 8,000 = 32,000 Goods sent to branch A/c 8,000 Branch adjustment A/c 8,000 Goods sent to branch 32,000 Purchases 320,00

Branch Stock Opening stock (Invoice price) 3,000 Closing stock 5,000 50,000

Branch Stock Reserve Closing stock reserve 1,000 (Invoice price) Balance 5,000 400

Loading = 3,000 / 125 x 25 = 600

Branch Adjustment Account Branch stock reserve (Opening) Goods sent to branch 600 8,000 Branch stock reserve A/c Branch Adjustment A/c

Sales Surplus Invoice Cost Loading

Branch Adjustment A/c 1,000 Stock reserve A/c 1,000

Branch Adjustment Account Branch expenses Shortage Closing stock reserve Profit xxx Opening stock reserve Goods sent to branch (Loading) Surplus Loss

Working Opening stock 2,400 / 133.333 x 33.333 = 600 Goods sent o branch 72,000 / 133.333 x 33.333 = 18,000 Closing stock 12,000 / 133.333 x 33.333 = 3,000