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Branch account

Accountancy

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??

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Kanaga Mani

Kanaga Mani

CA Inter

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12-Jun-20 20:55

358

Answers (11)

Can you be more clear?


ruchi lahoti

ruchi lahoti

CA Inter

27K+

13-Jun-20 16:15

In book back illustration 5 they included branch expenses into debtor method whyy


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Kanaga Mani

Kanaga Mani

CA Inter

3K+

13-Jun-20 16:26

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


ruchi lahoti

ruchi lahoti

CA Inter

27K+

13-Jun-20 18:19

Ok then why didn't adjust outstanding expense


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Kanaga Mani

Kanaga Mani

CA Inter

3K+

13-Jun-20 18:21

It is taken on the debit side (as it is payable)


ruchi lahoti

ruchi lahoti

CA Inter

27K+

13-Jun-20 18:41

It's also branch expenses why they didn't adjust this??


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Kanaga Mani

Kanaga Mani

CA Inter

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13-Jun-20 18:44

Thread Starter

Kanaga Mani

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

Branch accounts.jpg

ruchi lahoti

ruchi lahoti

CA Inter

27K+

15-Jun-20 17:24

Why didn't they adjust outstanding expense


Thread Starter

Kanaga Mani

Kanaga Mani

CA Inter

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15-Jun-20 17:35

Why didn't they adjust outstanding expense

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Thread Starter

Kanaga Mani

Kanaga Mani

CA Inter

3K+

15-Jun-20 17:35

Thread Starter

Kanaga Mani

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


ruchi lahoti

ruchi lahoti

CA Inter

27K+

15-Jun-20 18:00

Net profit as per branch account is 1102 it's correct


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Kanaga Mani

Kanaga Mani

CA Inter

3K+

15-Jun-20 18:20

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