Advanced Financial Accounting FIN611 Mian Ahmad Farhan Lecture15

Advanced Financial Accounting FIN-611 Mian Ahmad Farhan Lecture-15 Branch Accounting

Question & Solution in MS-word File

Unrealized Profit 63, 000 / 140 x 40 = Rs. 18, 000

Formula Unrealized profit = Branch closing stock x Loading Cost + Loading = 63, 000 / 140 x 40 = Rs. 18, 000

Independent Branch

Journal Entries Sold goods Debtors A/c xxx Sales A/c xxx Purchase goods Purchases A/c xxx Creditors A/c xxx

Journal Entries HO send goods to Branch HO Branch (Peshawar) A/c xxx Goods sent to branch A/c xxx Branch Goods received from Ho A/c xxx Head office (Karachi) A/c xxx

Journal Entries Goods in transit Branch Goods in transit A/c xxx Head office (Karachi) A/c xxx Cheque send by the Branch to HO Branch Head office (Karachi) A/c xxx Bank A/c xxx Cash in transit A/c xxx Branch (Peshawar) A/c xxx

Journal Entries Mistakes HO Specific Mistake Branch (Peshawar) A/c xxx Branch Head office (Karachi) A/c xxx Specific Mistake A/c xxx

Adjustments 1. 2. 3. HO allocate expenses to branch. HO maintains branch fixed assets in its books of accounts. If a branch transferred or obtain goods from other branch.

HO 1. Branch A/c xxx Specific expense A/c xxx 2. Branch A/c xxx Provision for depreciation A/c xxx Branch 1. Specific expense A/c xxx Branch A/c xxx 2. Depreciation A/c xxx Head office A/c xxx 3. Sending branch 3. Receiving branch A/c xxx Sending branch A/c xxx Head office A/c xxx Goods return to HO A/c xxx Receiving branch Goods received from HO A/c xxx Head office A/c xxx

Incorporation Transfer Branch net profit to HO net profit Branch A/c xxx Profit & Loss A/c xxx Transfer Branch Assets to HO book (Incorporation of assets) Branch furniture A/c xxx Branch stock A/c xxx Branch debtors A/c xxx Goods in transit A/c xxx Cash in transit A/c xxx Branch A/c xxx

Transfer Branch liabilities to HO book (Incorporation of liabilities) Branch A/c xxx Branch creditors A/c Branch outstanding Exp. A/c Branch overdraft A/c xxx xxx