In book back illustration 5 In debtor method we no need to consider the branch ( in head office point of view we don't know that) but in this sum they entered in branch account Outstanding expense of branch also included how??
Under debtors method, Branch account is prepared in the head office books in order to know the profit or loss of that particular branch, hence any expense relating to that branch can be taken. The following are ignored under this method- Bad debts, discount allowed, credit sales, sales returns by customers to branch, cash received by Branch from Branch Debtors, since the debtors at the end appear at the adjusted figure
It's also branch expenses why they didn't adjust this??
Branch expenses are paid out of cash collected from debtors and cash sales and balance cash is remitted to Head office (question specifies this clearly) . Hence, The branch expenses are taken under Branch cash account
Why didn't they adjust outstanding expense
They have already arrived at Net profit @ Rs. 1096 by deducting Outstanding expenses You can adjust it in the working note but then the profit would be Rs. 1,102