2 Consingment and Branch
2 Consingment and Branch
2 Consingment and Branch
Naresh Aggarwal’s
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Accounting • Costing • Taxation • Financial Management
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CA. Naresh Aggarwal’s
ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org
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CA. Naresh Aggarwal’s
ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org
Consignment Accounts
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Price: 40/-
36 Branch Accounts Practice in Accountancy 1
Journal Entries for Head Office Expenses charged to Branch CA. Naresh Aggarwal’s
AoA
In the books of Head Office In the books of Branch
B receives the goods at Baroda and incurred the following payments:
1a. When Assets are purchased and paid by Head Office Unloading - Rs.3,500
Branch A/c Dr. Assets A/c Dr. Freight - Rs.1,500
To Cash / Bank A/c To Head Office A/c Godown Rent - Rs.2,000
Selling Expenses - Rs.3,000
1b. When Assets are purchased and paid by Branch
Establishments - Rs.1,000 p.m.
No Assets A/c Dr.
Entry To Cash / Bank A/c A fterthree months B sends an accounts sales informing 1,200 units are sold at the
rate of Rs.180 per unit for cash and 300 units are sold at the rate of Rs.200 per unit
2. When Depreciation is charged on Assets on credit from which customers of 5 units proved bad.
No Depreciation A/c Dr.
B is entitled for 10% commission on sales and 2% del credere commission.
Entry To Assets A/c
Show Consignment Account and B’s Personal Accounts in the books of A.
[Profit: Rs.73,630; Consignee Bal.: Rs.2,29,880; Commission: 33,120; Stock: Rs.53,750]
CASE-2: Fixed Assets Accounts are with Head Office
Q-2: X of Delhi sent 1,000 Radio sets costing Rs.300 each to Y of Mumbai on
consignment basis. On sending the goods X incurred the following expenses:
In the books of Head Office In the books of Branch Freight - Rs.7,500
Insurance - Rs.2,500
1a. When Assets are purchased and paid by Head Office Miscellaneous - Rs.5,000
Branch Assets A/c Dr. No Y received the goods at Mumbai and incurred the following payments:
To Cash / Bank A/c Entry Octroi - Rs.7,000
1b. When Assets are purchased and paid by Branch Cartage - Rs.3,000
Branch Assets A/c Dr. Head Office A/c Rent of Godown - Rs.3,500
To Branch A/c To Cash / Bank A/c Selling Expenses - Rs.1,500
2. When Depreciation is charged on Assets Establishments - Rs.500 p.m.
Branch A/c Dr. Depreciation A/c Dr. After six months Y sent an accounts sales informing 500 Radio sets were sold at
To Branch Assets A/c To Head Office A/c the rate of Rs.500 per unit for cash and 200 Radio sets were sold at the rate of
Rs.550 per unit on credit from which customers of 10 units proved bad.
2 Consignment Accounts Practice in Accountancy 35
Y is entitled for 10% commission on sales and 2% del credere commission. 3. When goods returned by Branch
Show Consignment Account and Y’s Personal Accounts in the books of X. Goods Sent / ReturenedCA. Naresh
by Branch A/cDr. Aggarwal’s
Head Office A/c Dr.
[Profit: Rs.81,300; Commission: 43,200; Stock: Rs.97,500]
ACADEMY of ACCOUNTS
To Branch A/c
4. When Cash remitted by Branch
To Branch Stock A/c
Q-3: Sonu sent 1,000 bales of cloth costing Rs.250 each to Monu on consignment Accounting
Bank / Cash A/c • Costing • Taxation Financial ManagementDr.
Dr. Head• Office
basis. On sending the goods Sonu incurred the following expenses: WestTo Branch
Patel A/cNew Delhi. Ph:8800215448. Website:
Nagar, To Bank / Cash A/c
www.academyofaccounts.org
Freight - Rs.6,500
5. Any payment made by Head office on behalf of Branch
Insurance - Rs.1,500 Branch A/c Dr. Cause of Payment (Name) A/c Dr.
Miscellaneous - Rs.4,000 To Bank / Cash A/c To Head Office A/c
Monu received the goods and incurred the following payments:
6. Any collection received by Head office on behalf of Branch
Octroi - Rs.2,000
Bank / Cash A/c Dr. Head Office A/c Dr.
Carriage - Rs.3,000
To Branch A/c To Cause of Collection (Name) A/c
Salaries - Rs.4,500
Advertisements - Rs.2,500 7. Any payment made by Branch on behalf of Head Office
After three months Monu sent an accounts sales informing 900 bales were sold at Cause of Payment (Name) A/c Dr. Head Office A/c Dr.
the rate of Rs.350 per unit out of which 250 bales were on credit from which To Branch A/c To Bank / Cash A/c
AoA
customers of 20 bales proved bad. 8. Any collection received by Branch on behalf of Head Office
Monu was entitled for 10% commission on sales. Branch A/c Dr. Bank / Cash A/c Dr.
Show necessary accounts in the books of both parties. To Cause of Collection (Name) A/c To Head Office A/c
[Profit: Rs.29,200; Commission: 31,500; Stock: Rs.26,700; Consignee’s Bal.: Rs.2,64,500]
Journal Entries for Cash / Goods in Transit (In the books of H.O.)
Q-4: Sohan sent 2,000 bales of cloth costing Rs.300 each to Mohan on consignment
1. When goods remain in transit (any reason)
basis. On sending the goods Sohan incurred the following expenses:
Goods in Transit A/c Dr.
Insurance - Rs.7,500
To Branch A/c
Freight - Rs.4,500
Miscellaneous - Rs.1,000 1a. When ‘Goods in transit’ reached to Branch (Case: Goods sent to Branch)
Mohan received the goods and incurred the following payments: Branch A/c Dr.
Freight - Rs.4,000
To Goods in Transit A/c
Rent (Monthly) - Rs.1,500 1b. When ‘Goods in transit’ reached to Head Office (Case: Goods Returned by Branch)
Miscellaneous - Rs.2,500 Goods Sent / Returened by Branch A/c Dr.
After four months Mohan sent an accounts sales informing 1,500 bales were sold To Goods in Transit A/c
at the rate of Rs.500 per unit out of which 200 bales were on credit from which 2. When Cash remain in transit (any reason)
customers of 12 bales proved bad. Cash in Transit A/c Dr.
Mohan was entitled for 5% commission on sales. To Branch A/c
Show necessary accounts in the books of both parties.
2a. When ‘Cash in transit’ reached to Branch (Case: Cash sent to Branch)
[Profit: Rs.2,35,250; Commission: 37,500; Stock: Rs.1,54,250] Branch A/c Dr.
To Cash in Transit A/c
Goods Sent at Invoice Price
Q-5: X of Agra sends 1,000 units of an item costing Rs.200 each to Y of Baroda to 2b. When ‘Cash in transit’ reached to Head Office (Case: Cash remitted by Branch)
Cash A/c Dr.
be sold at invoice price or above. The profit is decided to be 20% of sales. On
To Cash in Transit A/c
sending the goods X incurred the following expenses:
Packing Charges - Rs.8,000
Freight - Rs.2,000
Forwarding - Rs.3,000
34 Branch Accounts Practice in Accountancy 3
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on credit from which customers of 10 units proved bad.
To Gross Loss (b/d) xxx By Gross Profit (b/d) xxx Y is entitled for 5% commission on invoice price, 20% commission on any price
To Branch Expenses xxx By Insurance Claim xxx realised above invoice price and 2% del credere commission.
To Petty Expenses xxx By Other Incomes xxx Show Consignment Account and Y’s Personal Accounts in the books of X.
To Depreciation xxx By Profit & Loss A/c (Net Loss) xxx [Profit: Rs.30,360; Commission: Rs.23,240; Stock: Rs.53,600; Consignee’s Bal.: Rs.1,99,760]
To Bad Debts xxx
To Discount Allowed xxx Q-6: A of Delhi sent 1,500 Radio sets at invoice price of Rs. 400 which is 1/3 of cost
To Branch Stock A/c xxx to B of Mumbai on consignment basis. On sending the goods A incurred the
(Cost of Ab. Loss / Shortage) following expenses:
To Other Expenses xxx Freight - Rs.3,000
To Profit & Loss A/c (Net Profit) xxx Insurance - Rs.1,500
xxxx xxxx Miscellaneous - Rs.1,500
B received the goods at Mumbai and incurred the following payments:
Octroi - Rs.1,000
--------------------------------------------------------------------- Cartage - Rs.3,500
Rent of Godown - Rs.2,500
Independent Branch Selling Expenses - Rs.1,500
Journal Entries for Goods and Cash Sent to Branch / Head Office Establishments - Rs.500 p.m.
After six months B sent an accounts sales informing 1,100 Radio sets were sold at
the rate of Rs.450 per unit from which customers of 5 units proved bad.
In the books of Head Office In the books of Branch B is entitled for 5% commission on invoice price, 15% commission on any price
1. When goods sent to Branch realised above invoice price and 2% del credere commission.
Branch A/c Dr. Branch Stock A/c Dr. Show Consignment Account and B’s Personal Accounts in the books of A.
To Goods Sent to Branch A/c To Head Office A/c [Profit: Rs.1,10,150; Commission: 40,150; Stock: Rs.1,62,800]
2. When Cash sent to Branch
Branch A/c Dr. Bank / Cash A/c Dr. Q-7: Anju sent 1,200 bales of cloth to Manju on consignment basis at invoice price
To Bank / Cash A/c To Head Office A/c which is Cost + 25%. The invoice price of each bale was Rs.300. On sending the
4 Consignment Accounts Practice in Accountancy 33
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To Balance b/d (Opening Balance) xxx By Cash A/c (Collection from Debtors) xxx
Q-8: Sohan sent 2,500 bales of cloth costing Rs.250 each to Mohan on consignment To Branch Stock A/c (Credit Sales) xxx By Discount A/c (Cash Discount) xxx
basis. The invoice price is Cost + 20%. On sending the goods Sohan incurred the By Bad Debts xxx
following expenses: By Branch Stock A/c (Sales Return) xxx
Insurance - Rs.15,000 By Balance c/d (Closing Balance)
Freight - Rs.14,000
Miscellaneous - Rs.11,000 xxxx xxx
Monu received the goods and incurred the following payments:
Freight - Rs.15,000 Branch PETTY CASH Account
Rent (Monthly) - Rs.2,500 Particulars Rs. Particulars Rs.
Miscellaneous - Rs.2,500
After four months Mohan sent an accounts sales informing 2,000 bales were sold To Balance b/d (Opening Balance) xxx By Petty Expenses (Exp. Incurred) xxx
at the rate of Rs.400 per unit out of which 200 bales were on credit from which To Bank A/c (Cash sent for petty Exp.) xxx By Balance c/d (Closing Balance) xxx
customers of 12 bales proved bad. xxxx xxx
Mohan is entitled for 5% commission on sales, 10% commission on above the
invoice price. Branch TOTAL CASH Account
Show necessary accounts in the books of both parties.
[Profit: Rs.1,78,700; Commission: 60,000; Stock: Rs.1,61,000] Particulars Rs. Particulars Rs.
To Balance b/d (Opening Balance) xxx By Branch Expenses (Cash Expense) xxx
Q-9: Anil sends goods on consignment to Sunil. The terms are that Sunil will To H.O. Bank A/c (Cash sent to Branch) xxx By H.O. Bank A/c (Cash Remitted to H.O.) xxx
receive 10% commission on the invoice price (which is cost plus 25%) and 20% of To Branch Stock (Cash Sales) xxx By Balance c/d (Closing Balance) xxx
any price realised above the invoice price. Sunil will meet his expenses himself , To Branch Debtors (Collections) xxx
goods to be sent freight paid. To Other Receipts (If any) xxx
Anil sent goods costing Rs.3,20,000 and spent Rs.30,000 on freight, forwarding
etc. Sunil accepted a bill of exchange for Rs.3,00,000 immediately on receiving xxxx xxx
the consignment. His expenses were Rs.4,000 as rent and Rs.2,000 as insurance.
Sunil sold three-fourth of the goods for Rs.3,90,000. Part of the sales were on
credit and one customer failed to pay Rs.8,000.
32 Branch Accounts Practice in Accountancy 5
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Branch Account sales of Rs.60,000 in respect of 3/4th of the quantity of goods consigned to him. His
actual out of pocket expenses were Rs.3,000. B accepted a bill drawn by A for
Particulars Rs. Particulars Rs.
Rs.30,000 and remitted the balance due from him in cash. Show Ledger Accounts
To Balance b/d (Opening Balance) xxx By Balance b/d (Opening Balance) xxx in Give the Ledger Accounts in the books of the consignor and the consignee.
Stock1 xx Stock Reserve (Loading)1 xx [Profit: Rs.5,430; A receives from B: Rs.24,180; Commission: Rs.2,820; Closing stock: Rs.19,250]
Debtors xx Outstanding Expenses xx
Petty Cash xx Other Liabilities, if any xx xxx Q-11: On 01.04.2013 Anju consigned 300 cases costing Rs.33,750 at a proforma
Furniture xx By Goods sent to Branch (Loading)2 xxx invoice price of 25% profit on sale to her Agent Manju. On the same date, Anju paid
Prepaid Expenses xx By Bank A/c (Remittance) xxx for loading and freight etc. amounting to Rs.2,700. Manju took delivery and paid
Other Assets xx xxx Cash Sales xx Rs.5,400 for octroi and other duties. Manju also remitted an advance of Rs.18,000
To Goods sent to Branch 2 xxx Collection from Debtors xx on receiving the consignment. She sold 240 cases for Rs.47,250. Manju is entitled
To Bank A/c (Cash Sent) Other Collections xx to 5% commission on gross sales and 10% on the sales price in excess of invoice
Salary xx less: Deductions, if any (xx) xxx price. Show Ledger Accounts in Give the Ledger Accounts in the books of the
Rent xx By Goods sent to Branch (Return)3 xxx consignor and the consignee.
Petty Cash xx By Profit and Loss A/c (Loss) xxx [Profit: Rs.10,282, Commission - Rs.3,488; Closing stock: Rs.10,620; Manju’s Balance: Rs.20,362]
Sundry Expenses xx By Balance c/d (Closing Balance)
Others Payments xx xxx Stock4 xx Abnormal Loss
To Goods sent to Branch (Loading)3 xxx Debtors xx Q-12: On 01.04.2013 goods cost price of which was Rs.1,32,000 were consigned
To Profit and Loss A/c (Profit) Petty Cash xx by Meena to her agent Seema at a proforma invoice price of 20% above cost.
To Balance c/d (Closing Balance) Furniture xx Meena paid freight and other forwarding charges amounting to Rs.4,000. Seema
Stock Reserve (Loading)4 xx Prepaid Expenses xx paid Rs.3,000 on unloading and she was allowed Rs.2,000 per month towards
Outstanding Expenses xx Other Assets xx xxx establishment cost; 5% commission on gross sales and 3% del credere commission.
Other Liabilities, if any xx xxx Seema paid Rs.1,000 as rent of godown for four months ended 31.07.2013.
xxxx xxxx Three-fourth of the goods were sold for Rs.1,32,000 half of which were credit
sales. Half of the balance of goods was stolen, but the stock being insured, a claim
lodged for Rs.14,000 was settled for Rs.13,000.
Write up the Consignment Account, Consignee's Account and Stock Lost on
6 Consignment Accounts Practice in Accountancy 31
AoA
Abnormal Loss: Rs.8,500; Closing Stock: Rs.10,150; Commission: Rs.5,280] (For Bad Debts*)
To Commission A/c xxx
Q-14: On 1st September goods costing Rs.5,28,000 were consigned by Amit of To Cash / Bank / Bills Payable xxx
Agra to his agent Sumit of Shrinagar, at proforma invoice price of 20% profit on cost To Balance c/d (Closing Balance)
price. Amit paid insurance and other forwarding charges on consignment amounting xxxx xxxx
to Rs.20,000. Sumit was allowed Rs.4,000 being establishment cost. He was
entitled to 5% commission on gross sales and an additional 3% del credere
commission on credit sales only. Sumit made an expense of Rs.4,080 as landing ---------------------------------------------------------------------
charges. Three-fourth of the goods were sold at 33 1/3% profit on cost, half of which
were credit sales. One-half of the balance of goods were destroyed by fire and a
claim lodged for Rs.56,000 was settled at a discount of 10%. Branch Accounts
Show the Consignment A/c and the Stock Loss on Consignment A/c as on 31st
December in the books of Amit and Sumit. Debtors System (Journal Entries)
[Adopted B.Com(P) Delhi] [Profit: Rs.75,620; Unsold stock: Rs.82,210;
Abnormal loss: Rs. 69,010; Total Sales: Rs.5,28,000; Commission: Rs.34,320] 1a. When goods sent to branch at cost :
Branch A/c (Cost of goods sent) Dr.
Q-15: X consigns to Y 200 cases of goods at a cost of Rs.1,000 per case. X incurs To Goods Sent to Branch A/c
the following expenses: Freight: Rs.4,500; Insurance: Rs.12,500. Y paid Cartage
Rs.2,000 and Rent Rs.2,280. 20 cases were destroyed by fire and a sum of 1b. When goods sent to branch at invoice price :
Rs.20,000 is recovered from the insurance company. Out of 180 cases, 130 cases (i) Branch A/c (Invoice value of goods sent) Dr.
of goods were sold for Rs.1,200 each. Commission payable to Y is 5% on sales. Y To Goods Sent to Branch A/c
sent the bank draft in full settlement of account. Show Ledger Accounts in Give the
(ii) Goods Sent to Branch A/c (Loading amount of goods sent)
Ledger Accounts in the books of the consignor and the consignee.
To Branch A/c
[Profit: Rs.3,570; Abnormal loss: Rs.21,900; Unsold stock Rs.54,750,
Commission: Rs.7,800; Received from Y: Rs.1,43,920] 2. When cash sent to branch (Any reason) :
Branch A/c Dr.
Q-16: Dinesh of Delhi sent 500 machine parts to Suresh of Calcutta on Consignment To Bank A/c
basis. The cost of each machine part was Rs.200, but it was invoiced at cost plus
30 Consignment Accounts Practice in Accountancy 7
AoA
By Balance c/d (Closing Balance) [Profit: Rs.9,000; Abnormal loss: Rs.12,500; Closing Stock: Rs.15,000;
xxxx xxxx Commission: Rs.6,000; Suresh’s Balance: Rs.29,000]
Goods Sent on Consignment Account Q-17: 500 bicycles were consigned by Anita & Co. of Agra to Kavita & Co. of
Kolkata at an invoice cost of Rs. 1,000 each. Anita & Co. paid freight, Rs. 30,000
Particulars Rs. Particulars Rs. and insurance, Rs. 10,000. During the voyage 50 bicycles were totally damaged
To Consignment A/c2 xxx By Consignment A/c2 xxx by fire, had to be thrown overboard. Kavita & Co. took delivery of the remaining
(Loading of goods sent, if any) (Value of Goods Sent) bicycles and paid Rs. 22,500 for custom duty.
To Consignment A/c3 xxx By Consignment A/c3 xxx Kavita & Co. sent a Bill of Exchange to Anita & Co. for Rs.3,50,000 payable after
(Value of goods returned) (Loading of goods returned, if any) three months which was discounted at 12% p.a. and latter sent an account sales
To Trading / Purchase A/c showing that 350 bicycles were sold at Rs. 1,800 each. Expenses incurred by
(Net cost of goods sent) Kavita & Co. on godown rent and advertisement etc., amounted to Rs. 25,000. She
is entitled to a commission of 5%.
xxxx xxxx Prepare the consignment account, Kavita & Co.’s A/c and Abnormal Loss A/c in the
books of Anita & Co., assuming that nothing has been recovered from the insurers
Abnormal Loss Account due to defect in the policy.
[Profit: Rs.1,78,000; Closing Stock: Rs.113,000; Abnormal Loss: Rs.54,000;
Particulars Rs. Particulars Rs. Commission: Rs.31,500; Consignee’s Balance: Rs.2,01,000]
To Consignment A/c xxx By Insurance Co. / Bank xxx
(Cost of abnormal loss) (Claim admitted, if any) Q-18: 1,000 cycles were consigned by X to Y at Rs.150 each. X paid freight
By Profit and Loss A/c xxx Rs.10,000 and insurance Rs.1,500. During transit 100 cycles were totally damaged
(Balancing figure) by fire. Insurance company paid Rs.14,000 for claim of loss. Y took delivery of 900
cycles and paid Rs.1,530 for octroi. 800 cycles were sold at Rs.220. Expenses of
xxxx xxxx Y were Rs.2,000. Y was entitled to a commission of 5%. Y settled the account by
bank draft. Prepare ledger accounts in the books of X and Y
[B.Com (Pass) 1987] [Profit: Rs.34,640; Abnormal loss: Rs.16,150;
Unsold stock: Rs.16,320;Received from Y: Rs.1,63,670]
8 Consignment Accounts Practice in Accountancy 29
Q-19: Ajay of Agra consigned 200 radio sets costing Rs. 500 each to Vijay of 9. For any kind of Abnormal Loss
Mumbai. The invoice was made pro forma at Rs. 600 per set. Vijay was entitled to CA. Naresh Aggarwal’s
(i) Abnormal Loss A/c (Cost of Ab. Loss) Dr. No Entry
a commission of 5% on sales plus 2% del credere commission and 10% of any
excess price realised over invoice price. Vijay was to bear all expenses incurred
ACADEMY of ACCOUNTS
To Consignment A/c
after the goods reached his godown. While sending the goods Ajay paid Rs.3,000 (ii) Accounting
Insurance Co. / Bank
• A/c
Costing • Taxation Dr. No Entry
• Financial Management
To Consignment A/c (If claim admitted)
as forwarding expenses and insurance. In transit 20 radio sets were damaged West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org
and Ajay recovered Rs. 8,000 from Insurance Company. Vijay took delivery of the 10a. If Consignment A/c shows Profit
remaining radio sets paying Rs. 9,000 as freight cartage etc. Vijay sold 140 radio Consignment A/c (Profit Amount) Dr. No Entry
sets at Rs. 800 each, 50 of them on credit. Out of which the proceeds of 3 radio sets To Profit and Loss A/c
could not be recovered because of disappearance of the customers. He also paid 10b. If Consignment A/c shows Loss
Rs.1,000 as storage and selling expenses. Vijay sent a Bank Draft for balance Profit and Loss A/c A/c (Loss Amount) Dr. No Entry
amount due to Ajay. To Consignment A/c
Prepare necessary accounts in the books of both the parties.
[Profit: Rs.22,260; Abnormal Loss: Rs.10,300; Commission: Rs.10,640;
Consignee’s Balance: Rs.92,360; Stock: Rs.26,600] Format of Accounts in the Books of Consignor
Consignment Account
AoA
Goods Taken by Consignee Particulars Rs. Particulars Rs.
Q-20: Anita is the agent of Babita who despatched 200 Motors in January 2013,
drawing a Bill on Anita for Rs.40,000 for three months. A motor costs Rs.300, the To Consignment Stock A/c 1 xxx By Stock Reserve A/c 1 xxx
(Opening stock, if any) (Loading of Opening Stock, if any)
invoice price decided to be is Rs.400. Anita is entitled to a commission of 15% of
the invoice price plus 40% of the excess realised over Rs.400. She is also To Goods sent on Consignment A/c2 xxx By Goods sent on Consignment 2 xxx
(Cost or Invoice Price) (Loading of Goods sent, if any)
responsible for all expenses incurred by her but not for freight and Octroi.
Anita accepted the Bill. Expenses paid by Anita were: Freight Rs.4,000; Octroi To Bank A/c (Expenses of Consignor) By Goods sent to Branch (Return)3 xxx
Packing xx By Consignee’s A/c (Sales) xxx
Rs.2,000; Storage Rs.1,000 and Insurance Rs.800.
Freight / Carriage / Cartage xx Cash Sales xx
At the end of March 2013, Anita reported that she has sold 150 Motors at an Duties and Taxes xx Credit Sales xx
average price of Rs.440. It was agreed then that Anita would take over the remaining Loading Charges xx Stock Taken (If any) xx xxx
motors on her own account at landed cost plus 20%. Transit Insurance xx By Abnormal Loss (Cost of Loss) xxx
Prepare: (a) Consignment A/c, (b) Anita’s Personal A/c, (c) Babita’s Personal A/c. Other Expenses xx xxx By Consignment Stock A/c 4 xxx
[Profit: 8,400; Consignee’s Balance: 28,400; Commission: 11,400; Stock taken by Anita: 19,800] To Consignee’s A/c (His Expenses) (Closing stock, if any)
Unloading Charges# xx By Profit and Loss A/c (Loss) xxx
Freight / Carriage / Cartage# xx
Goods Returned to Consignor
Duties and Taxes# xx
Q-21: ‘A’ sent goods to ‘B’ of Calcutta to be sold on behalf of ‘A’. ‘B’ getting a Godown Rent xx
commission (including del credere commission) of 10% on sales effected by him. Staff Salary xx
All expenses were to be borne by ‘A’. The invoice value of goods was Rs.1,50,000 Advertisement xx
made up as cost plus 20%. ‘A’ spent Rs.2,500 on forwarding and packing. ‘B’ paid Insurance Charges xx
the following: Return Freight xx
Rs. Bad Debts* xx
Other Expenses xx
Freight and cartage to godown 8,000
Commission xx xxx
Storage 1,500 To Goods sent to Branch A/c 3 xxx
Insurance 1,000 (Loading of Goods returned, if any)
Miscellaneous 500 To Stock Reserve A/c 4 xxx
At the end of three months ‘B’ reported that he had sold three-fifth of the goods for (Loading of Closing Stock, if any)
Rs.1,00,000. He returned 1/5 of the goods to ‘A’ as unsalable but he was confident To Profit and Loss A/c (Profit)
xxxx xxxx
28 Consignment Accounts Practice in Accountancy 9
1a. When goods sent on consignment basis at Cost of selling the remained goods. ‘B’ paid Rs.1,750 as freight on the returned goods.
Consignment A/c (Cost of goods sent) Dr. No Entry One customer, who had bought on credit failed to pay Rs.4,000 due from him.
To Goods Sent on Consignment A/c Ascertain, by preparing relevant accounts, the profit or loss suffered by the two
parties.
1b. When goods sent on consignment basis at Invoice Price
[Adopted B.Com(P) Delhi] [Consignment Profit: Rs.1,850; Unsold stock: Rs.32,100;
(i) Consignment A/c (I.P. of goods sent) Dr. No Entry
Retuned Goods: Rs.25,000; Consignee’s Commission: Rs.10,000; Net Profit of Consignee: Rs.6,000]
To Goods Sent on Consignment A/c
(ii) Goods Sent on Consignment A/c Dr. No Entry Q-22: Meena & Co. of Calcutta who sent 400 sewing machines on consignment to
To Consignment A/c (Loading) Seema & Co. of Patna, spent Rs.1,000 on packing. The cost of each machine was
AoA
2. When Expenses are paid by Consignor Rs.112 but it was now invoiced at 25% above cost.
Consignment A/c (Any Expnese) Dr. No Entry Two boxes containing 10 machines in each box was lost in transit. Seema & Co.
To Bank / Cash A/c was asked to pay Rs.1,900 as freight of the remaining machines. Seema & Co. had
3. When Expenses are paid by Consignee to spend Rs.380 as cartage and octroi duty and Rs.760 as godown rent. Seema &
Consignment A/c (Any Expenses) Dr. Consignor’s A/c Dr. Co. sold 300 machines @ Rs.190. and found 40 machines defective and therefore
To Consignee’s A/c To Cash / Bank A/c returned them to Calcutta at a cost of Rs.200, Seema & Co. is entitled to a commission
of 5% on invoice price, 20% of any excess realized on the invoice price and 1% del
4a. When goods returned by consignee at Cost
credere commission. Seema & Co. could not realize sale proceeds of 20 machines.
Goods Sent on Consignment A/c Dr. No Entry
To Consignment A/c (Cost of Return) Show Ledger Accounts in Give the Ledger Accounts in the books of the consignor
and the consignee.
4b. When goods returned by consignee at Invoice Price [Profit: Rs.13,880, Abnormal loss: Rs.2,290; Unsold Stock Rs.5,940;
(i) Goods Sent on Consignment A/c Dr. No Entry Commission: Rs.5,670; Value of Goods Returned: Rs.4,480]
To Consignment A/c (I.P. of Return)
(ii) Consignment A/c (Loading of Return) Dr. No Entry Q-23: Ajay of Amritsar sent a consignment of cotton goods to Vijay of Varodara,
To Goods Sent on Consignment A/c invoiced at Rs.2,00,000. The invoice price was made by adding 25% to the cost.
5. When goods sold by Consignee (Cash sales and credit sales) The expenses incurred by Ajay were: Packing Rs.4,800; Carriage Rs.3,200;
Consignee’s A/c Dr. Cash / Bank/ Consignor’s Debtors A/c Dr. Insurance Rs.2,400 and other expenses Rs.5,200. After three months he received
To Consignment A/c To Consignor’s A/c Account Sales intimating that half of the consignment was sold at Rs.1,20,000. The
expenses incurred by the consignee were: Freight Rs.6,000; Fire Insurance
6. When commission allowed to Consignee (Cash sales and credit sales)
Rs.3,600 and other expenses Rs.2,000. His commission was 5% on sales and del
Consignment A/c Dr. Consignor’s A/c Dr.
To Consignee’s A/c To Commission A/c credere commission 2 1/2%. But no sale could be made of the remainder so that it
was brought back after another nine months at a further cost of Rs.12,000 paid by
7. When any remittance received from Consignee (after sales or in Advance) Vijay. The goods were damaged and valued at 20% below cost. Give necessary
Cash / Bank / Bills Receivables A/c Dr. Consignor’s A/c Dr. ledger accounts in the books of both the parties.
To Consignee’s A/c To Cash / Bank / Bills Payables A/c
[Adopted B.Com(P) Delhi]
8. For any kind of Normal Loss [Loss: Rs.24,200; Goods Returned: Rs.64,000; Commission: Rs.9,000; Amount due to Vijay: 87,400]
No Entry No Entry
10 Consignment Accounts Practice in Accountancy 27
Q-24: On 01.01.2013, Sanjay consigned 2,000 kgs. of tea costing Rs.60 per kg. to
Vijay. Sanjay incurred the following expenses on sending the goods : CA. Naresh Aggarwal’s
Freight Expenses
Rs.
2,000
ACADEMY of ACCOUNTS
Insurance 400 Accounting • Costing • Taxation • Financial Management
Sundry Expenses 600 West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org
During the three months of the consignment ended 31.03.2013, Vijay incurred the
following expenses: Discount allowed to customers 150
Rs. Bad Debts 250
Selling Expenses 600 Cash Sent to Branch for :
Godown Rent 500 Salaries 6,000
Carriage to Godown 1,000 Office Expenses 4,000
On 01.02.2013, Vijay sold 1,200 kgs. of tea for cash at a profit of 25% on sales. On Petty Cash 1,500 11,500
20.03.2013. Vijay returned 150 kgs. of tea which were poor quality to Sanjay and Petty Expenses at Branch 2,000
paid return freight and carriage of Rs.250. Out of the remaining tea 200 kgs. [Profit: 24,340; Closing Stock: 8,280; Closing Debtors: 14,400; Closing Petty Cash: 700]
destroyed by fire. Vijay charged his commission @ 5% and settled the accounts on
AoA
31.03.2013. Sanjay closes his books every year on 31 st March every year. Q-27: Delhi Ltd. has two branches at Mumbai and at Goa. Goods are invoiced to
Show the necessary accounts in the books of the consignor and consignee. branches at cost plus 50%. From the following particulars prepare the necessary
[Profit: Rs.15,150; Vijay’s Balance: Rs.88,850; Goods Returned: Rs.9,000; accounts on Stock and Debtors system to reveal the profit earned at the branches:
Abnormal Loss: Rs.12,400; Commission: Rs.4,800; Closing stock: Rs.27,900]
Mumbai Goa
Opening Stock in Consignment Rs. Rs.
Q-25: Bombay Consignment Account in the books of Arti of Agra showed a debit Stock at invoice price on 01.01.2013 37,200 62,400
balance of Rs.15,000 representing the cost of 10 bicycles on 01.01.2013. On Debtors on 01.01.2013 27,200 34,800
01.03.2013 Arti sent a further consignment to Bombay of 40 bicycles costing Goods invoiced to Branches at Cost 1,36,000 1,44,000
Rs.1,600 each. The freight and other charges amounted to Rs.2,400. On 15.12.2013 Cash sales 1,00,040 1,40,000
the Bombay Agent sent an Account Sales showing that 8 bicycles from the old Credit sales 1,24,000 1,20,400
stock realised Rs.1,400 each and 25 bicycles from the second consignment realised Goods returned by Branch to Head Office 6,000 -
Rs.2,000 each and 15 bicycles remained in stock unsold. Two bicycles from the Goods transferred from Goa to Mumbai 8,400 8,400
old stock being unsalable at Bombay were returned to Agra, for which the Bombay Cash collected from Debtors 1,21,600 1,19,200
Agent sent a separate debit note for Rs.300 being expenses incurred by him. Goods returned by Debtors 4,800 6,000
The Bombay Agent is entitled to a selling commission of 5 per cent which covers all Surplus in stock - 1,200
out of pocket expenses in respect of the consignment. Shortage in stock 1,800 -
Show the necessary accounts in the books of the consignor and consignee. Discount allowed to customers 800 1,400
Supposing that she closes her accounts on 31st December each year. Expenses at Branches 21,600 26,800
[Profit: Rs.4,340; Bombay Agent’s Balance: 57,840;
Returned Goods: Rs.3,000; Commission: 3,060; Closing stock: 24,900] [Adopted B.Com(P) Delhi] [Closing Stocks: Mumbai Rs.22,560 and Goa Rs.16,800;
Closing Debtors: Mumbai Rs.24,000 and Goa Rs.28,600; Gross Profits: Mumbai Rs.73,080 and
Normal Loss Goa Rs.84,800 or Rs.85,600; Net Profits: Mumbai Rs.49,480 and Goa Rs.57,400]
Q-26: Mahesh consigned 400 tins of vegetable oil (one tin contains 10 Kgs of oil)
to Dinesh costing Rs.50 per Kg. The consignors paid Rs.16,000 for forwarding
charges and Rs.24,000 for freight. 10 tins of oil were totally damaged during transit. •••••••••••••••••••••••••
Dinesh took delivery of the oil and sent an Account Sales showing that 300 tins
were sold for Rs.2,40,000. The expenses incurred by them were custom duty and
26 Branch Accounts Practice in Accountancy 11
Q-25: M/s Star Traders, Delhi, have opened a branch at Panipat on 1.7.2012. The
CA. Naresh Aggarwal’s
goods were sent by the Head Office to the branch and invoiced at selling price of the
branch which was 125% of the cost price of the head office. The following are the
particulars relating to the transactions of branch :
ACADEMY of ACCOUNTS
Rs.
Accounting • Costing • Taxation • Financial Management
Goods sent to branch (at cost to Head Office) 2,80,800 West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org
Sales at Branch:
Cash 1,25,000
clearing charges Rs.14,320 and selling expenses Rs.4,000. They are entitled to a
Credit 1,75,000 3,00,000
commission of 5% on sales. Dinesh also reported that 20 Kgs. of oil were lost due
Cash collected from Debtors 1,56,000
to leakage which was considered to be normal. Show the necessary ledger accounts
Discount allowed 4,000
in the books of Mahesh and Dinesh.
Cash sent to branch for :
[Profit: Rs.32,000; Dinesh’s Balance: Rs.2,09,680;
Wages 3,000
Abnormal Loss: Rs.6,000; Commission: Rs.12,000; Closing stock: Rs.56,320]
Freight 7,000
Insurance 4,000
Q-27: The Chemicals Company, consigned 1,000 Ltrs. of chemicals to its agent
Other expenses including godown rent 6,000 20,000
Dinesh of Delhi on 01.04.2013. The cost of the chemicals was Rs.200 per Ltr. The
AoA
Spoiled cloth in bales written off at invoice price 500
Chemicals Company paid Rs.50,000 as freight and insurance. During transit, 25
Insurance claim received for spoiled cloth 350
Ltrs. were accidently destroyed for which the insurer paid directly to the consignors
Stock on 30.06.2013 at Invoice Price 55,500
Rs.4,500 in full settlement of the claim.
Ascertain the gross profit and net profit for the Branch for the year ended 30.06.2013
Dinesh took delivery of the remaining consignment on the 10th April and
after preparing Branch Stock Account and Branch Debtors Account.
immediately accepted a Bill drawn on him by The Chemicals Company for
[Surplus in Stock: Rs.5,000; Closing Debtors: Rs.15,000; Gross profit: Rs.64,000; Net profit: 39,950]
Rs.1,00,000 for three months. On 30 th June Dinesh reported that 750 Ltrs. were
sold @ Rs.300. His expenses being: Godown rent Rs.2,000; Advertisement
Q-26: Lacknow Head Office supplied goods to its branch at Jaipur at invoice price
Rs.10,000 and on Staff Salaries Rs.20,000. Dinesh is entitled to a commission of
which is 150% of cost. All cash received by the branch is remitted to Head Office
3% plus 1 1/2% Del Crederes. Dinesh reported a loss of 10 Ltrs. due to leakage,
and branch expenses are paid by the Head Office. From the following particulars
assumed to be normal. Dinesh paid the amount due by Bank Draft.
relating to Jaipur branch for the year 2013, prepare Branch Stock Account, Branch
Show the accounts in the books of The Chemicals Company and Dinesh which
Debtors Account, Goods sent to Branch Account in the books of the Head Office so
close the books on 30 th June.
as to find out the and net profit made by the branch.
[Loss: Rs.6,568; Bank Draft received from Dinesh: Rs.82,875;
Rs.
Abnormal Loss: Rs.6,250; Commission: Rs.10,125; Closing stock: Rs.54,307]
Stock with Branch on 1.1.2013 18,600
Branch Debtors on 1.1.2013 13,600
Q-28: Rajesh consigned 210 Boxes of Apples (one Box contains 10 Kgs of Apples)
Petty cash balance on 1.1.2013 1,200
to Suresh costing Rs.10 per Kg. The consignors paid Rs.600 for forwarding charges
Cost of Goods sent to Branch 68,000
and Rs.2,400 for freight. 100 Kgs. were damaged in transit due to moisture and
Sales at the Branch
considered normal. But further 20 Boxes were totally damaged during transit due
Cash 50,020
to an accident.
Credit 62,000 1,12,020
Suresh took delivery of the remaining goods and sent a Bank Draft of Rs.20,000 an
Cash collected from Debtors 60,800
Account Sales showing that 150 boxes were sold for Rs.25 per Kg. The expenses
Goods returned by branch to Head Office 2,400
incurred by them were Duty and Freight Rs.2,700; Storage Expenses Rs.1,500
Goods transferred by Jaipur Branch to Alwar Branch 1,500
and Selling Expenses Rs.2,500. They are entitled to a commission of 20% on
Goods transferred by Delhi Branch to Jaipur Branch 4,500
sales. Show the necessary ledger accounts in the books of Rajesh and Suresh.
Shortage of Stock at Head Office 4,200
[Profit: Rs.5,750; Suresh’s Balance: Rs.3,300;
Shortage of Stock at Branch 900
Abnormal Loss: Rs.2,400; Commission: Rs.7,500; Closing stock: Rs.4,050]
12 Consignment Accounts Practice in Accountancy 25
Q-29: Coal Company, consigned 80 tons of Coal to its agent Mohan. The cost of
the Coal was Rs.1,500 per ton. Coal Company paid Rs.15,000 as freight to railway. CA. Naresh Aggarwal’s
During 20 days of transit a weight loss of 5 ton were reported which were considered
normal.
ACADEMY of ACCOUNTS
Mohan took delivery of the remaining consignment and immediately accepted a Accounting • Costing • Taxation • Financial Management
Bill drawn on him by Coal Company for Rs.80,000 for three months. After three West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org
months Mohan reported that 60 tons were sold @ Rs.2,500 per ton. His expenses
being: Freight: Rs.3,000; Godown Rent: Rs.5,000 and on Staff Salaries Rs.6,000.
Rent, Rates and Taxes at branch 1,800
Mohan is entitled to a commission of 4%. Half of the closing stock was stolen from
Branch office expenses 800
godown. Mohan paid the amount due by Bank Draft.
Branch Stock at invoice price on 31.12.2013 12,000
Show the accounts in the books of The Coal Company and Mohan.
[B.Com(P) 1992] [Surplus in Stock: Rs.2,400; Closing Debtors: Rs.9,400;
[Profit: Rs.22,600; Bank Draft received from Dinesh: Rs.50,000;
Gross profit: Rs.11,040 or Rs.12960; Net profit: Rs.9,360]
Abnormal Loss: Rs.13,800; Commission: Rs.6,000; Closing stock: Rs.13,800]
Q-23: Golden Ltd. sent goods to its Rajasthan Branch at cost plus 25%. From the
following particulars prepare Branch Stock A/c, Branch Adjustment A/c and Branch
Profit and Loss A/c :
AoA
Rs.
••••••••••••••••••••••••• Opening stock at branch (invoice price) 10,000
Goods sent to branch 40,000
Loss-in-transit at invoice price 5,000
Theft at invoice price 2,000
Loss in weight (normal) at invoice price 1,000
Sales 51,000
Expenses 16,000
Closing stock at branch at cost 12,000
Claim received from for loss in transit by Head office 4,000
[Gross proflt: Rs.28,600; Net profit: Rs.11,000; Surplus in Stock: Rs.24,000]
Q-24: The Bombay Head Office sent goods to Madras Branch at 25% profit over
costs. From the following details, prepare the Branch Account in the Head Office
books and ascertain the net profit at the Branch :
Rs.
Opening stock of goods at Branch at invoice price 20,000
Goods sent to Branch at invoice price 90,000
Loss of goods in transit at invoice price 6,000
Pilferage of goods at branch at its cost considered normal 1,200
Closing stock at Branch at its cost 16,000
Sales at Branch 1,05,000
Salaries and wages at Branch 6,000
Other expenses at Branch 3,000
Madras Branch received Rs.4,000 from the Insurance Company in settlement of the
claim for the loss of goods in transit.
[Profit: Rs.24,800; Surplus in Stock: 18,200]
24 Branch Accounts Practice in Accountancy 13
Q-20: Kolkata Head office opened a branch on 01.04.2012. Goods are invoiced at
selling price which was fixed by adding 25% to the cost. From the following particulars CA. Naresh Aggarwal’s
relating to the year 2012-2013, ascertain the profit or loss made at the branch under
the Stock and Debtors System :
ACADEMY of ACCOUNTS
Rs. Accounting • Costing • Taxation • Financial Management
Goods sent to Branch (Invoice Price) 2,10,000 West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org
Cash Sales 75,000
Credit Sales 1,05,000
Cash received from Debtors 93,600 Branch Accounts
Discount allowed to Customers 2,400
Goods returned by Customers 3,000 Q-1: Delhi Head Office supplied goods to its branch at Agra at invoice price which
Cash remitted to Branch for : is cost plus 50%. All cash received by the branch is remitted to Delhi and branch
Rent 1,800 expenses are paid by the Head Office. From the following particulars relating to
Salaries 9,000 Agra branch for the year 2013, prepare Branch Stock Account, Branch Debtors
Sundry Expenses 1,200 12,000 Account and Petty Cash Account in the books of the Head Office so as to find out
Defective cloth found in the bales written off 300 the and net profit made by the branch.
AoA
[Closing stock: Rs.32,700; Closing Debtors: Rs.6,000; Gross profit Rs.35,400; Net profit Rs.20,760] Rs.
Stock with Branch on 1.1.2013 ?
Q-21: On 01.01.2013, goods costing Rs.1,32,000 were invoiced by Punjab Head Branch Debtors on 1.1.2013 22,000
Office to its branch at Patna and charged up at a selling price designed to produce Petty cash balance on 1.1.2013 200
a gross profit of 25% on the selling price. At the end of the first quarter, the returns Goods received from Head Office 3,72,000
from Patna branch showed that the sales were Rs.1,20,000. Goods invoiced at Goods returned to Head Office 36,000
Rs.2,400 to the branch had been returned to Head Office. The closing stock at the Credit Sales 1,72,000
branch was Rs.49,200 at selling price. Record the above transactions in Patna Shortage of stock at Branch 3,000
Branch Stock Account, Patna Branch Stock Adjustment Account in the Head Office Cash received from Debtors 1,80,000
Ledger and balance the said accounts on 31.03.2013. Discount allowed to Debtors 4,800
[Gross profit: Rs.30,000; Net profit: Rs.26,700; Shortage of stock: Rs.4,400] Bad Debts 2,000
Sales Return 6,000
Q-22: Crown Industries, Bombay has a branch at Madurai to which goods are Petty Expenses 1,600
invoiced at cost + 25%. The branch makes sales both for cash and on credit. Cash sent by Head Office
Branch expenses are paid direct from Head Office and the branch remits all cash Rent 4,800
to Head Office. From the following details, prepare necessary ledger accounts in Salaries 48,000
Head Office books to calculate branch profits as per the Stock and Debtors System. Petty Cash 2,000 54,800
Rs. Cash Sales 2,24,000
Goods Received from Head Office at invoice price 60,000 Stock with Branch on 31.12.2013 60,000
Returns to Head Office at invoice price 1,200 Branch Debtors on 31.12.2013 ?
Branch Stock on 01.01.2013 at invoice price 6,000 Petty cash balance on 31.12.2013 ?
Cash Sales 20,000 [Profit: 66,800; Opening Stock: 1,17,000; Closing Debtors: 1,200; Closing Petty Cash: 600]
Credit Sales 36,000
Branch Debtors on 01.01.2013 7,200 Q-2: Anita Traders supplied goods to its branch at Kanpur at invoice price which
Cash collected from debtors 32,000 is 1/3 above cost. All cash received by the branch is remitted to Delhi and branch
Discount allowed to debtors 600 expenses are paid by the Head Office. From the following particulars relating to
Bad Debts in the year 400 Kanpur branch for the year 2013, prepare Branch Stock Account, Branch Debtors
Goods returned by debtors to branch 800 Account and Petty Cash Account in the books of the Head Office so as to find out
14 Branch Accounts Practice in Accountancy 23
AoA
Office Expenses 24,000
Petty Cash 2,000 32,000 Cash Sales 1,59,000 Sales Returns 4,500
Cash Sales 45,000 Allowance to Customer on Selling Stock at I.P. on 31.12.2013 1,03,500
Stock with Branch on 31.12.2013 ? Price (adjusted while invoicing) 3,000 Petty Cash on 31.12.2013 150
Branch Debtors on 31.12.2013 ?
Petty cash balance on 31.12.2013 900 [Adopted B.Com(P) Delhi]
[Loss: 1,100; Closing Stock: 20,000; Closing Debtors: 19,000; Opening Petty Cash: 1,500] [Closing Debtors: 15,900, Shortage in Stock: 4,500; Gross profit: Rs.93, 000; Net profit: Rs.43,200]
Q-3: XYZ Ltd. had its Head Office at Delhi and a Branch at Pune. The Head Office Q-19: Agra head office supplied goods to its branch at Delhi at invoice price which
invoices the goods to the Branch including a profit of 20% of Invoice Price. is cost plus 50%. All cash received by the branch is remitted to Agra and all branch
The following are the transactions of the Head Office with the Branch for the expenses are paid by the Head Office. Following are particulars relating to Delhi
year ended 31.12.2013 : Branch for the year 2013 :
Rs.
Stock at Branch as on 1.1.2013 (at Invoice Price) 46,200 Stock with Branch on 01.01.2013 60,000 Discount allowed to Debtors 2,400
Debtors at Branch as on 1.1.2013 24,750 Branch Debtors on 01.01.2013 12,000 Expenses (cash sent to Branch)
Petty cash as on 1.1.2013 750 Petty Cash on 01.01.2013 100 Rent 2,400
Furniture on 1.1.2013 20,000 Goods received from Head Office 1,86,000 Salaries 24,000
Goods supplied to the Branch (at Invoice Price) 2,26,800 Goods returned to Head Office 18,000 Petty Cash 1,000
Remittance from the Branch Credit Sales less Returns 86,000 Branch Stock on 31.12.2013 54,000
Cash Sales 15,750 Cash Sales 1,04,000 Petty Cash on 31.12.2013 100
Collections from Debtors 2,36,610 2,52,360 Cash received from Debtors 90,000 Branch Debtors on 31.12.2013 ?
Amount sent to Branch
Salary 11,160 Prepare: Branch Stock A/c, Branch Debtors A/c, Branch Expenses A/c and Branch
Advertisements 3,600 Adjustment A/c in the books of the Head Office so as to find out the Gross Profit and
Petty Cash 4,500 19,260 Net Profit made by the branch.
Stock at Branch as on 31.12.2013 (at Invoice Price) 34,725 [Surplus in Branch Stock: Rs.16,000; Closing Debtors: Rs.5,600;
Sundry Debtors at the Branch as on 31.12.2013 75,690 Gross Profit: Rs.74,000; Net profit: Rs.44,200]
Petty cash as on 31.12.2013 1,125
22 Branch Accounts Practice in Accountancy 15
AoA
by the Head Office and goods sent to branch are invoiced at selling price which is
20% above cost. All sales by the branch are on credit terms. Branch expenses are Stock at Branch as on 01.01.2013 (at Invoice Price) 15,400
paid by the Head Office and all cash received by the Branch is remitted to the Head Debtors at Branch as on 01.01.2013 8,250
Office. All branch transactions are recorded in the Head Office books. From the Petty cash as on 01.01.2013 250
following particulars prepare stated accounts to reveal the profit earned at the Goods supplied to the Branch 75,600
branches: Amount sent to Branch :
Rs. Salary 3,720
Branch Stock as on 01.04.2012 72,000 Rent 1,200
Branch Debtors as on 01.04.2012 51,500 Petty Cash 1,500 6,420
Transactions during the year to 2012-2013 were: Remittance from the Branch :
Goods sent to branch at Invoice Price 6,49,200 Cash Sales 5,250
Returns from branch to Head Office 12,840 Realisation of debts 78,870 84,120
Cash received from Debtors 6,20,000 Sundry Debtors as on 31.12.2013 25,230
Discount allowed to Debtors 11,500 Petty cash as on 31.12.2013 375
Branch expenses paid by Head Office 60,000 Stock at Branch as on 31.12.2013 11,575
Branch Stock as on 31.03.2013 96,360 From the above show the Branch A/c in the Head Office books.
Branch Debtors as on 31.03.2013 20,000 [B.Com(P) 1998 Regular]
Prepare following accounts in the books of the Head Office : [Profit: Rs.31,265; Credit Sales Rs.95,850; Petty Expenses: Rs.1,375; Surplus in Stock: Rs.21,675]
(a) Branch Stock A/c (b) Branch Debtors A/c
(c) Branch Expenses A/c (d) Branch Adjustment A/c Q-5: A head office in Bombay has a branch in Delhi to which goods are invoiced
[Adopted B.Com(P) Delhi] by the head office at cost price plus 25%. Prepare Branch Account in the books of
[Shortage in Stock: Rs.12,000; Credit Sales: Rs.6,00,000; Net Profit: Rs.18,500] head office from the following particulars :
Rs.
Q-18: Delhi head office supplies goods to its branch at Jammu at invoice price Stock in the beginning 12,500
which is cost plus 50%. All cash received by the branch is remitted to Delhi and all Debtors in the beginning 12,000
branch expenses are paid by the Head Office. From the following particulars related Goods received from Bombay 40,000
to Jammu Branch for the year 2013 prepare Branch Debtors A/c, Branch Stock Cash Sales 16,000
Cash received from Debtors 29,500
16 Branch Accounts Practice in Accountancy 21
AoA
Cash received from Branch Debtors 42,000
Expenses incurred by the Branch for the year (Other then Petty Exp.) 11,500 Normal loss during transit (at invoice price) 5,000
Branch stock on 31.12.2013 52,000 Debtors on 31.12.2013 10,000
Petty Cash on 31.12.2013 650 Cash at Branch on 31.12.2013 4,000
Show how the Branch Account will appear in the books of the Head Office. Cash remitted to H.O. 90,000
[Profit: Rs.77,900; Closing Debtors: Rs.8,000; Surplus in Stock: Rs.84,000; Petty Expenses: Rs.600] H.O. remitted cash to Branch 5,000
Cash sent by H.O. 10,000
Q-7: A Head Office in Bombay has a branch in Ahmedabad to which goods are Credit Sales 95,000
invoiced by the Head Office at cost price plus 25%. All cash received by the branch Bad Debts and Allowances to customers 1,000
is daily remitted to the head office. All expenses are paid from Bombay. From the Closing Stock at Invoice Price 20,000
following particulars show how the branch account will appear in head office [Surplus in Stock: Rs.25,000; Stock in transit: Rs.30,000; Branch Expenses: Rs.5,000;
books (entries to be made at invoice price): Collection from Debtors: Rs.84,000; Gross profit: Rs.35,000; Net profit: Rs.29,000]
Rs.
Stock on 01.07.2012 (at invoice price) 12,500 Q-16: From the details given below relating to Patna branch for the year ending
Debtors on 01.07.2012 12,000 March 31, 2013 prepare Patna Branch account and Branch Debtors account in the
Goods invoiced from Bombay 40,000 books of Head Office. Show your working clearly. Goods are invoiced to give a
Remittances to Bombay: profit of 20% of selling price.
Cash sales 16,000 Stock on 1-4-2012 15,000
Cash received from debtors 29,000 45,000 Debtors on 1-4-2012 6,000
Goods returned to Head Office 2,400 Furniture on 1-4-2012 3,000
Cheques received from Bombay: Petty Cash on 1-4-2012 600
Wages and Salaries 11,000 Insurance prepaid on 1-4-2012 150
Rent, rates, etc. 3,000 Salaries due on 1-4-2012 3,000
Sundry expenses 510 14,510 Goods sent to Branch 1,20,000
Stock on 30.06.2013 (invoice price) 15,000 Normal Loss of goods 2,000
Debtors on 30.06.2013 22,500 Abnormal Loss of goods 3,000
[Profit: Rs.12,910; Credit Sales: Rs.39,500; Surplus in Stock: Rs.20,400] Cash Sales 1,65,000
Total Sales 2,10,000
20 Branch Accounts Practice in Accountancy 17
AoA
Cash in Hand on 01.01.2013 1,200
Stock on 01.04.2012 75,000 Rent, Rates and Taxes 24,000 Goods Supplied by the Head Office 2,40,000
Stock on 31.03.2013 90,000 Sundry Expenses 4,800 Goods Returned to Head Office 3,000
Sundry Debtors on 01.04.2012 42,000 Cash Sales for the year 3,24,000 Goods Returned by Debtors 1,440
Sundry Debtors on 31.03.2013 54,000 Credit Sales 2,10,000 Cash Received from Debtors 90,000
Goods Invoiced from H.O. 5,46,000 Cash Received from Debtors 1,98,000 Cash Sales 1,50,000
Salaries Paid 20,400 Salaries Still Owing 2,000 Credit Sales 90,000
Discount allowed 900
[B.Com(P) 1993 External] [Profit: 58,000; Surplus in Stock: Rs.3,000] Expenses paid by Head Office :
Rent 3,600
Q-14: Diamond Ltd., Mumbai started a branch in Delhi on 01.04.2012 to which Salary 7,200
goods were sent 120% of cost. Branch expenses are met from branch cash, balance Stationery and Printing 900 11,700
money remitted to Head Office. The following further details are given for the year Petty Expenses paid by Branch Manager 840
ended 31.03.2013 : Furniture as on 31.12.2013 (after charging 10% Depreciation for full year) 3,240
Stock on 31.12.2013 (Invoice price) 42,000
Cost of goods sent to branch 1,00,000 Cash remitted to Head Office 86,000 [Profit: Rs.32,760; Closing Debtors: Rs.24,660; Shortage: Rs.1,440; Opening Furniture: Rs.3,600]
Goods received by branch Cash in hand at branch
till 31.03.2013 at I.P. 1,08,000 as on 31.03.2013 4,000 Q-9: India Ltd. Delhi had a branch at Mumbai on 1st April, 2012 to which goods
Credit sales for the year 1,16,000 Cash remitted by Head Office were sent 25% above cost. All the money collected at branch are remitted to Head
Debtors as on 31.03.2013 41,600 to branch during the year 6,000 Office. The following further details are given for the year ended 31st March, 2013
Bad debts 400 Closing stock at branch Rs.
Expenses incurred at branch 24,000 at invoice price 12,000 Stock at Branch on 01.04.2012 at invoice price 10,000
Debtors as on 01.04.2012 18,000
Show the Branch Account in the Head Office books to determine profit or loss for Cash in hand at Branch on 01.04.2012 2,000
the branch for the year ended on 31.03.2013. Give your workings clearly. Cost of goods sent to Branch during 2012-2013 80,000
[Adopted B.Com(P) Delhi] Goods received by Branch till 31st March, 2013 at invoice price 85,000
[Profit: Rs.45,600; Cash received from Debtors: Rs.74,000; Credit sales for the year 52,000
Cash Sales: Rs.34,000; Stock in Transit: Rs.12,000; Surplus in Stock: Rs.54,000]
18 Branch Accounts Practice in Accountancy 19
AoA
Rs. For Salaries 2,000
Opening Balances : For Rent 1,000
Debtors 10,000 For Petty Cash 300 3,300
Petty cash 1,000 Cash remitted by Branch during the year 2012-2013 :
Furniture 2,000 Cash Sales 10,000
Stock (invoice price) 8,000 21,000 Cash from Debtors 9,000 19,000
Goods invoiced by Head Office during the year 88,000 Credit Sales during the year 25,000
Cash sent by Head Office for petty expenses 2,000 Goods returned by Debtors during the year 400
Branch expenses and losses : Discount allowed to Debtors 500
Freight and Advertisement 5,600 Bad Debts 100
Bad Debts 50 Closing Balances at Branch as on 31.03.2013 :
Depreciation on Furniture 80 Stock 10,000
Petty Expenses 1,500 7,230 Petty Cash 200 10,200
Sales : Write off depreciation on Furniture 10% p.a.
Cash 50,000 [Profit: Rs.10,600; Closing Debtors: Rs.19,000; Closing Furniture: Rs.5,400]
Credit 36,000 86,000
Goods returned by Debtors 800 Q-12: Goa Head Office has a branch in Delhi to which goods are invoiced by the
Goods returned by Branch to Head Office 2,000 Head Office at 20% profit on sale price. All cash received by the branch is daily
Cash received from Debtors 20,000 remitted to Head Office. From the following particulars, show how the Branch
Stock at the end at invoice price 7,800 Account will appear in the Head Office books. Also prepare other necessary A/cs.
[B.Com(P) 1991] Rs.
[Profit: Rs.13,320; Closing Debtors: Rs.25,150; Closing Petty Cash: Rs.1,500; Shortage: Rs.1,000] Stock on January 01.01.2013 (at invoice price) 62,500
Debtors on 01.01.2013 60,000
Q-11: The Bombay Stores invoices goods to their various branches at cost, and Goods supplied by the Head Office 2,00,000
the branches sell the goods not only for cash but on credit also. Expense of branches Cash sales 80,000
are paid by the Head office. From the following particulars relating to Madras Cash received from customers 1,47,500
Branch, prepare Branch Account in the books of Head Office. Goods returned to the Head Office 12,000