Preparation of Branch Account
ILLUSTRATION:
1. BRANCH ADJUSTMENT METHOD
Under this system, the profit loading will be taken to a separate account called “Branch Adjustment Account”. The following will be prepared:
- Branch stock account.
- Branch Adjustment account.
- Goods sent to branch.
- Debtors Account.
FORMAT:
BRANCH STOCK ACCOUNT (INVOICED PRICE)
GOODS SENT TO BRANCH ACCOUNT (COST PRICE)
BRANCH ADJUSTMENT ACCOUNT
PROFIT AND LOSS ACCOUNT
ILLUSTRATION 1
SAM Enterprise is a retail business concern with head office at Lagos and office at Ibadan. The head office makes all purchases and charges out goods to the branches at cost plus 25% which represents the selling price to the branch. The branch limit to the head office all cash received from customers. The following transaction took place at the branch during the year ended 31st December, 2013
The valued of the stock at selling price at the branch on 31st December was N6, 380.00
You are required to prepare in the head office books the following accounts.
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