Q1: HP Ltd, a manufacturing business, exports some of its products through an overseas branch whose currency is

Florins, which carries out the final assembly operation after selling the goods:
The trial balance of the HO & the Branch on June30, 2000 were as under:
Ho Branch
Particulars Dr(Rs) Cr(Rs) Dr(FL) Cr(FL)
Building at cost 14,000 63,000
Debtors/creditors 8,900 9,500 36,000 1,560
Sales 104,000 432,000
Issued share capital 40,000
Components sent to branch 35,000
HO/ Branch 60,100 504,260
Branch-Cost of sales 360,000
Prov for Dep on Machinery 1,500 56,700
HO Cost of Sales( including goods sent to Branch) 59,000
Administrative cost 15,200 18,000
Stock on 30.06.2000 28,900 11,520
P & L a/c 2,000
Machinery at cost 6,000 126,000
Remittances 28,000 272,000
Cash at bank 4,600 79,200
Selling & distribution cost 23,300 28,800
220,000 220,000 994,520 994,520
Following adjustments are to made:
I) The Cost of sales figure includes depreciation @10% on the cost of Machinery.
II) A Provision of 300 for unrealized profit in the branch stock is to be made.
III) On 26th June, 2000, the branch remitted 16,000 FL. This amount was received by the HO on 14 th July, 2000 and
realized Rs.1990
IV) During May, 2000 a customer of the branch by mistake paid the HO for goods supplied by the branch. The amount
due from him was FL 320 which realized Rs.36. It has been correctly dealt by the HO but not yet entered in the branch
accounts.
V) Provides commission @5% of the net profits of the branch after charging such commission which is payable to the
branch manager.
VI) The exchange rate were: (a) at Ist July, 1999-10 FL=1 Rs., 30th June, 2000—8 FL= 1 Rs, Avg-9 FL= 1 Rs.
On the date of purchase of Building & Machinery- 7 FL= 1 Rs
Convert the branch trial balance into Rs
Prepare the trading & P &l account for the year ended 33th June,.2000 showing to the extent possible HO & branch
results separately.
Balance sheet with the combined figures
Ans: Total of trial bal: 118,390, Difference In exchange: 1995Cr, Gp; 80,600& 9,400 Net profit: 41200 & 4245,
B/s total:97 290, Commission to manager:1200 Fl or Rs.150

Q2: Sonali chains of Calcutta have a branch at Burdwan. Goods are sent to branch at Cost. Branch sells only goods
received from HO. Branch sales are partly cash & partly credit. All cash collected are sent to HO immediately and branch
expenses are paid by HO. Following are the details of transaction relating to the branch for the year ended 31 st
Dec,2000(all fig in Rs.)
Stock at branch on 1.1.2000 6,800 Returns by branch customers 500
Debtors at branch at 1.1.2000 7,000 Cash received on ledger accounts 33,000
Goods in transit on 1.1.2000 4,800 Branch salary and wages paid by HO 6,700
G/s to branch during the year 78,600 Branch sundry expenses paid by HO 800
Goods received by the branch during the year 74,800 Branch o/s Salary 1,200
 Goods returned by the branch 2,000 branch Prepaid wages 500
Returned goods received by the HO during the year 1,600 Bad debts written off 200
Cash sales 54,000 Wastage of stock at branch 400
Credit sales 35,500
Other details are:
I) Goods in transit Rs.4800 included goods costing Rs. 3200 sent by HO to branch and goods costing Rs.1600 returned by
branch to HO in previous year.
II) During the year Cash Rs.5,000 sent by branch to HO on 27.12.2000 which is received by HO on 3.1.2001.
III) Branch maintains a steady GP of 20% on sales.
Prepare branch account in the books of HO.
Ans: Net profit: 9,000, Total of branch A/c:114,900, Stock at branch: 8,000

Q3: ABC ltd, Delhi has branch A & B. It charges goods to its branch at cost plus 25%. Following information is available of
the transactions of the branch A for the year ended on 31st march, 2000.
Balance on 1.4.2000: Stock-30,000; Debtors: 10,000; Petty Cash:50
Transactions during the year 2000-01 (A branch)
Goods sent to A branch at IP 325,000 Returns by branch customers 500
Goods returned by branch to HO at IP 10,000 Cash Sent for petty expenses 34,000
Cash sales 100,000 Bad debts written off 500
Credit sales 175,000 Goods trfd to B branch under HO advice 15,000
Goods pilfered(IP) 2,000 Insurance charges paid by HO 500
Goods lost in Fire(IP) 5,000 Insurance co paid to HO for loss by fire 3,000
Balance on 31.3.2001: Petty Cash: 230, Debtors-14,000
Goods worth Rs.15, 000 (included above) sent by A branch to B branch was in transit on 31.3.2001.
Prepare the necessary accounts as per stock & debtors.
Ans: Closing Stock-48,500, Closing Debtors: 14,000, GP-54,900, Net profit: 17,480

Q4: Subhash ltd has its branches at Chandigarh & Gwalior to whom goods are invoiced at cost plus 25%.
Following information is available of the transactions at Chandigarh branch.
Bal on 1.4.2000 Bal on 31.3.2001
Debtors 12,000 11,000
Petty cash 150 250
Stock at IP 40,000 ?
Transactions during the year:
Goods sent to branch at IP 420,000 Returns by branch customers 500
Goods returned to HO at IP 15,000 Cash Sent for petty exp 32,000
Cash sales 105,000 Bad debts written off 400
Credit sales 180,000 Goods trfd to gwalior branch under HO advice at Ip 12,000
Normal loss 350 Insurance charges paid by HO 200
Goods pilfered(IP) 3,000 Insurance co paid to HO for loss by fire 3,000
Goods lost in Fire(IP) 4,000
Note: Goods transferred to Gwalior branch were in transit on 31.3.2001.
Prepare accounts as per Stock & Debtors system.
Ans: Branch Stock: 141,150, Gp: 56,620, Net profit: 21,720

Q5: Sellwell ltd has two branches at Cochin & Bangalore. During the year ended 31st march, 2001, Goods have been
invoiced to the cochin branch at 20% above cost and to the Bangalore branch at 25% above cost. The branches do not
maintain complete books of accounts but the following figure is available for the year ended 31st march, 2001:

Cochin Bangalore Cochin Bangalore

Op Stock at Ip Cash as on 1.4.2000
 10,000 10,000 2,000 1,000
Goods sent to branch at
Cost 50,000 40,000 Cash on 31.3.2001 1,000 500
Amount remitted by Goods returned by customers to branch
Branch 80,000 80,000 at SP 5,000 4,000

Amount remitted by HO 15,000 15,000 Expenses at branch in cash 9,000 3,000

Gods returned by branch at
IP 3,000 -
All sales at the branch are for cash. During the year Cochin branch purchased Fixed assets worth Rs. 4,000 and this
amount is included in the fig of branch expenses. Cochin branch trfd to the Bangalore branch stock costing (to Ho) Rs.
5,000 during the year. The Bangalore branch remitted Rs. 2,000 to the Cochin branch during the year. There was a
closing stock of Rs. 24,000 valued at IP at the Cochin branch. There was no closing stock at the Bangalore branch. The
branch stock account in the books of Ho showed the following position as on Ist April, 2000:
For cochin- Rs.2500 Cr, For Bangalore: Rs2000 Cr.
Prepare accounts as per stock and debtors system.
Ans: Surplus: 34,000 & 3250, Gp: 12,667, 13,900, Net profit: 36,000, 13,500
Cash Sales: 76,000, 73,500

Q6: ABC Ltd with its HO at Delhi, Invoiced goods to its branch at Ghaziabad @ 20% less than the list price which is cost
plus 100%, with instructions that Cash sales were to be made at IP and Credit sales at catalogue price i.e. List price.
From the following particulars available from the branch, prepare Branch Stock account, Branch Adj. A/c, Branch P & L
A/c and Branch debtors A/c.
Stock on Ist jan, 2000 (IP) 6,000 Cash received from Debtors 42,817
Debtors on Ist Jan, 2000 5,000 Expenses at Branch 8,683
Goods received from HO
(IP) 66,000 Debtors on 31st Jan,2000 12,183
Sales: Stock on 31st Dec,2000 (IP) 8,800
Cash 23,000 Remiitance to HO 60,000
Credit 50,000
Ans: GP:33,625, Net profit-24,817, Shorage:200

Q7: B ltd , Bombay has a branch in Calcutta. Goods are sent to branch at Cost plus 50%
Op stock at IP 600,000 Debtors paid during the year 1,100,000
Op Debtors 200,000 Stock Shorage at IP 60,000
Goods received by the branch during the year 1,800,000 Goods returned by the branch at IP 90,000
Goods in transit to branch (opening) at IP 30,000 Bad debts written off 20,000
Cash sales(30000 below IP) 630,000 Branch expenses 40,000
Credit sales(75000 above IP) 1,200,000
From the above information prepare Branch Stock A/c, Branch Adjustment A/c, Branch P & L A/c.
Ans: Total of Branch A/c: 24,75,000, GP-640,000, Net Profit-540,000

Q8: A Ho Invoices goods to its branch @20% less than the list price. Customers of HO and the branch are charged for
goods sold at cost plus 100%. From the particulars given below, prepare accounts for the year 2006 to show the profit
made at the HO and the branch.
HO Branch
Op stock at cost(at IP for branch) 40,000 16,000
Purchases 400,000 -
G/s to branch(at IP) 96,000 -
Sales 600,000 80,000
Expenses 86,000 4,000
Net Profit: Branch: 238,000 and HO 12,000
Closing stock: 80,000 & 48,000

Q: ABC ltd established its branch in Delhi several years ago. All the purchases is done at the Ho and the branch is allowed
to purchase goods locally in special circumstances. The branch is expected to achieve a profit of 50% on cost price.
The following information is available in respect of Bombay branch for the first 6 months of 2006:
Op stock at branch at cost 28,000
Opening debtors 9,000
Goods received by Branch at HO at sp 180,000
Credit sales 60,000
Cash sales 102,000
Transfer from other branch to mumbai branch at sp 12,000
Transfer to other branches by mumbai branch at sp 21,000
Goods returned to HO at sp 6,000
Cash from debtors received at HO 53,000
Bad debts 2,000
Goods returned by credit customers to branch 2,400
Goods returned by credit customers to HO 1,200
Goods purchased by mumbai branch from local suppliers at cost 15,000
Expenses at the branch 7,500
Closing stock at branch
From HO at SP 45,000
From local purchases 3,000
Additional info:
Goods amounting to 6000 at cost to the HO were in transit
Branch had on Jan1, 2006, furniture and other equipment at a book value of 7500, Depreciation rate is 10%
Goods purchased locally were sold at a profit of 25% on SP.
Prepare branch stock account, branch debtors account & Branch account.
Ans:Shortage-18,400, Total of branch account-2,66,600, Closing Debtors-10,400, Total of branch account-338,725, P &
L-29,325