Advanced financial accounting - Lecture 16: Branch accounting (Whole sale branch)

Advanced financial accounting - Lecture 16: Branch accounting (Whole sale branch). The main topics covered in this chapter include: reconciliation; murree branch A/c; head office A/c; additional information; journal entry; incorporation of branch net profit; incorporation of branch liabilities;... Please refer to the lecture for details!

Advanced Financial  Accounting FIN­611   Mian Ahmad Farhan  Lecture­16 Branch Accounting (Whole sale  branch)           Question & Solution    in Word Format   Reconciliation  Branch Book  Goods in transit A/c  3,700 Head office A/c 3,700   Murree Branch A/c  Balance b/f  460 Balance c/f 460 Head Office A/c Balance b/f  Balance c/f  3,240 460 3,700 Goods in  transit 3,700 3,700 Additional Information  Advertisement expenses allocated by HO Rs. 1,000 Depreciation charged by HO on branch equipments @10%  using straight line method   Journal Entry  Head office  Branch A/c 1,000 Advertisement A/c 1,000  Branch A/c 500          Provision for dep. A/c 500 Branch  Advertisement A/c 1,000 Head office A/c 1,000 Provision for dep. A/c 500 Head office A/c 500 Murree Branch A/c  Balance b/f  460 Advertisement 1,000 Depreciation Exp.   500 1,960 Balance c/f 1,960 1,960 Head Office A/c Balance c/f  1,960 1,960 Balance b/f Advertisement  Depreciation Exp.  460 1,000 500 1,960 Journal Entry (HO Book) Incorporation of branch net profit   Murree branch A/c 20,570  Profit & Loss A/c  20,570 Incorporation of branch Assets    Murree branch goods in transit A/c Murree branch furniture A/c Murree branch debtors  A/c Murree branch stock A/c Murree branch cash  A/c    Murree branch A/c  6,000 3,700 Incorporation of branch Liabilities     Murree branch A/c   Murree branch creditors A/c  3,700   7,700 1,780 22,880 1,850 1,850 Journal Entry (HO Book) Incorporation of branch net profit   Murree branch A/c 19,070  Profit & Loss A/c  19,070 Incorporation of branch Assets    Murree branch goods in transit A/c Murree branch furniture A/c Murree branch debtors  A/c Murree branch stock A/c Murree branch cash  A/c    Murree branch A/c  6,000 3,700 Incorporation of branch Liabilities     Murree branch A/c   Murree branch creditors A/c  3,700   7,700 1,780 22,880 1,850 1,850 Partnership  A B Total  Net Profit ­­­­ ­­­­ 70,000 Interest on  capital  10,000 20,000 (30,000) Partner salary  24,000 ­­­­ (24,000) 16,000 (16,000) Profit sharing 9,600 6,400 16,000 43,600 24,600 ­­­ A 16,000 x3/5 B 16,000 x 2/5  Balance sheet  Murree Branch A/c  As at 31st December,2007  Liabilities Amount Assets Head office Fixed Assets Opening balance (Cr) 460  Add  profit (Cr)      20,570  21,030   1,850 Creditors    1,960 Furniture   Closing stock  Debtors  Goods in transit  Cash at bank  Amount 6,000 7,700 3,700 3,700 1,780 1,960 Balance sheet  Murree Branch A/c  As at 31st December,2007  Liabilities Balance b/f               460  Add Advertisement  1,000 Depreciation             500             Profit & Loss   Creditors   Amount 1,960 19,070 1,850 1,960 Assets Fixed Assets Amount Furniture   Closing stock  Debtors  Goods in transit  Cash at bank  6,000 7,700 3,700 3,700 1,780 1,960 ... Incorporation of? ?branch? ?net profit   Murree? ?branch? ?A/c 20,570  Profit & Loss A/c  20,570 Incorporation of? ?branch? ?Assets    Murree? ?branch? ?goods in transit A/c Murree? ?branch? ?furniture A/c Murree? ?branch? ?debtors  A/c... Murree? ?branch? ?debtors  A/c Murree? ?branch? ?stock A/c Murree? ?branch? ?cash  A/c    Murree? ?branch? ?A/c  6,000 3,700 Incorporation of? ?branch? ?Liabilities     Murree? ?branch? ?A/c   Murree? ?branch? ?creditors A/c  3,700  ... Incorporation of? ?branch? ?net profit   Murree? ?branch? ?A/c 19,070  Profit & Loss A/c  19,070 Incorporation of? ?branch? ?Assets    Murree? ?branch? ?goods in transit A/c Murree? ?branch? ?furniture A/c Murree? ?branch? ?debtors  A/c