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
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. HO allocate expenses to branch.

2. HO maintains branch fixed assets in its books of
accounts.
3. If a branch transferred or obtain goods from
other branch.
 HO Branch
1. Branch A/c xxx 1. Specific expense A/c xxx

Specific expense A/c xxx Branch A/c xxx

2. Branch A/c xxx 2. Depreciation A/c xxx

Provision for depreciation A/c xxx Head office A/c xxx

3. Sending branch

3. Receiving branch A/c xxx Head office A/c xxx

Sending branch 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 xxx

Branch outstanding Exp. A/c xxx
Branch overdraft A/c xxx