BRANCH ACCOUNTS
DEPARTMENTAL/CENTRALISED BRANCH
QUESTION 1
Boafo Limited has its Head Office in Accra and a branch in Cape Coast. All goods are either
purchased or manufactured by the Head Office and sent to the branch at 25% markup.
Sales by the Branch are either on cash or credit basis. The Branch Manager maintains the branch’s
own Sales Ledger as well as Cash book and all other accounting records are kept by the Head
Office.
The following balances relating to the branch were extracted from Head Officer Ledger at the end
of the year ending 31/12/2018.
GH¢
Cash Sales
5,920
Credit Sales
4,600
Cash Received from Receivables
3,960
Bad Debts
800
Discount allowed
52
Rents and Rates
360
Branch Managers Salary
408
Returns to Head Office
700
Branch Inventory
1/1/2018
1,500
31/12/2018
1,040
Branch Receivables 1/1/2018
840
Goods sent to Branch at Invoiced price
10,920
Any difference on the Stock Account should be regarded as abnormal loss.
You are required to prepare:
i.
Branch Inventory Account
ii.
Goods Sent to Branch Account
iii.
Branch Mark-up Account
iv.
Branch Receivables Account
v.
Branch Statement of Profit or Loss
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QUESTION 2
KUKUS Traders have their head office in Sampa and a branch in Japekrom. All purchases are
made by head office and sent to branch at cost plus 331/3% mark-up. A separate branch account
is kept. The branch maintains a sales ledger but all other accounts are kept at the head office. The
following information relates to April 2010:
The following additional information is available:
i.
ii.
iii.
Stock taking on April 30, 2010 reveal an apparent shortage of stock of invoice price of
GH¢180
Cash sales include sale of some stock which had to be sold at GH¢600 less than the
invoice price due to damaged state
A part of the head office expenses is charged to branch profit and loss monthly. For April
2010, it amounted to ¢530.
Required:
a) Draw up the following ledger accounts in the books of head office:
i. Branch stock account
ii. Goods sent to branch account
iii. Branch mark-up account
iv. Branch debtors account
v. Branch expenses account
vi. Bank accounts
b) Branch profit and loss account
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QUESTION 3 (ASSIGNMENT)
Senior Distributors and Co. are dealers in electronic materials operating from 3 centres: i.e.
the head Office in Accra and 2 branches; Kumasi and Bolgatanga. For the last quarter
ended31st December 2007, the following information was provided:
Additional information:
a) Goods are transferred from Head Office to branch at a mark-up of 20%
b) Branch managers are paid a commission of 10% on profit after charging such
commission.
Required:
Prepare the following accounts in columnar form:
i.
The Branch stock;
ii.
Good sent to Branch;
iii.
Branch Debtors
iv.
Branch Stock Adjustment/Brach Markup
v.
Branch Profit or Loss Account for the period.
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AUTONOMOUS/INDEPENDENT/ DECENTRALISED BRANCH
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QUESTION 4
A & B Ltd’s head office is in Accra, and it has a branch at Tema. The following trial
balances have been extracted from the respective books of account of both the head office
and the branch as at 30th June 2008.
Additional information:
Stock at 30 June 2008 was valued as follows:
¢
Head office at cost
20,000
Branch at cost to branch
24,000
Goods in transit to branch at cost to branch
12,000
Goods purchased by the head office and sold to the branch are transferred at cost plus 20%.
At 30 June 2008 the branch had transferred ¢10,000 to the head office's bank account but
as at that date, no record had been made in the head office's books of account
Required:
Prepare in adjacent columns the following:
a) The head office, the branch, and the income statement for the year to 30 June 2008;
and
b) The head office, the branch, and the combined statement of financial position as at that
date.
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QUESTION 5 (ASSIGNMENT)
Kaba Limited acquired a shop in Accra and has also rented a premise at Hohoe. The trial
balance below shows the activities o f the company for the financial y e a r ended 31st
December, 2017.
Accra
Hohoe
Credit
Credit
Debit
Debit
GH¢
GH¢
GH¢
GH¢
Capital
199,200
126,000
24,000
Noncurrent assets
Stock
7,200
2,400
Debtors
16,800
6,000
Creditors
15,600
8,400
Bank
60,000
24,000
Goods sent to branch
6,600
6,000
Sales
96,000
36,000
Purchases
78,000
Rent
2,400
600
Wages and salaries
4,800
840
Current account:
Accra
19,800
Ho hoe
Sundry expenses
Stock adjustment
21,000
2,400
360
1,200
318,600 318,600
64,200
64,200
The following additional information
(i)
Depreciation is to be provided
Accra
GH¢l,200
Ho hoe
GH¢240
(ii)
Closing stock valued at cost was:
Accra
GH¢9,000
Ho hoe
GH¢360
However g o o d s valued at GH¢1,200 were in transit from Accra to Hohoe
(iii)
It is the policy of the enterprise to send goods to the branch at cost plus a profit
loading of 33 1/3%.
Required:
The statement of profit or loss of Kaba Ltd, showing separately that of Accra, Hohoe and the
combined entity for the year ended 31st December 2017 and the statement of financial position
for the combined entity as at 31st December 2017.
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