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Kanaga Mani

Kanaga Mani

CA Inter

430

12-Jun-20 20:55

21

Branch account

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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Answers (11)

ruchi lahoti

ruchi lahoti

Moderator

13-Jun-20 16:15

Can you be more clear?

Kanaga Mani

Kanaga Mani

CA Inter

430

13-Jun-20 16:26

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

ruchi lahoti

ruchi lahoti

Moderator

13-Jun-20 18:19

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

Kanaga Mani

Kanaga Mani

CA Inter

430

13-Jun-20 18:21

Ok then why didn't adjust outstanding expense

ruchi lahoti

ruchi lahoti

Moderator

13-Jun-20 18:41

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

Kanaga Mani

Kanaga Mani

CA Inter

430

13-Jun-20 18:44

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

ruchi lahoti

ruchi lahoti

Moderator

15-Jun-20 17:24

Kanaga Mani

Kanaga Mani

CA Inter

430

13-Jun-20 18:44


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

Attachments

Branch accounts.jpg

Kanaga Mani

Kanaga Mani

CA Inter

430

15-Jun-20 17:35

Why didn't they adjust outstanding expense

Kanaga Mani

Kanaga Mani

CA Inter

430

15-Jun-20 17:35

Why didn't they adjust outstanding expense

Attachments

IMG_20200615_173430.jpg

ruchi lahoti

ruchi lahoti

Moderator

15-Jun-20 18:00

Kanaga Mani

Kanaga Mani

CA Inter

430

15-Jun-20 17:35


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

Kanaga Mani

Kanaga Mani

CA Inter

430

15-Jun-20 18:20

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