Branch Acc pdf Page 1

BRANCH ACCOUNT
Particulars Amount Particulars Amount
To Balance b/d By Balance b/d
Stock (At Invoice Price) xx Creditors xx
Debtors xx O/s Expenses xx
Cash in hand xx By Stock Reserve (on Opening stock) xx
Fixed Assets xx By Goods sent to branch (Loading) xx
Prepaid expenses xx By Goods Returned to H.O. (At I.P.) xx
To Goods sent to branch (At I.P.) xx By Bank (Remittances to H.O.)
To Goods returned to H.O. (Loading) xx • Cash Sales xx
To Bank (Cash sent by H.O. to branch for xx • Collection from Debtors xx
expenses/Purchase of fixed assets) • Recovery from Insurance Co. xx
• Expenses paid by branch (xx)
• Assets purchased by branch (xx) xx
To Stock Reserve (on Closing stock) xx By Balance c/d
To Balance c/d Stock (At I.P.) xx
Creditors xx Debtors xx
O/s Expenses xx Cash in hand xx
To Net Profit (Bal. Fig.)* xx Fixed Assets xx
Prepaid expenses xx
By Net Loss (Bal. Fig.)* xx
XXX XXX
*Any one of these

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 FINAL ACCOUNTS METHOD

BRANCH TRADING AND P & L A/C

Particulars Amount Particulars Amount
To Opening stock (at cost) xx By Sales
To Goods sent to branch xx Cash xx
(-) Returns (xx) xx Credit xx
To Direct Expenses xx ( - ) Sales Return (xx) xx
To Gross Profit (Bal. Fig.) xx By Abnormal Loss xx
By Closing stock (at cost) xx
XXX XXX
To Indirect expenses xx By Gross Profit xx
To Abnormal Loss xx By discount received xx
To Net Profit (Bal. Fig.) xx
XXX XXX

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Question
XYZ is having its Branch at Kolkata. Goods are invoiced to the branch at 20% profit on sale. All
expenses are paid by head office except petty expenses which are met by the Branch Manager.
Prepare branch account in the books of Head Office.

Rs. Rs.
Stock on 1st April 2019 (invoice price) 30,000 Expenses paid by head office:
Sundry Debtors on 1st April, 2019 18,000 Rent 1,800
Petty Cash as on 1st April, 2019 800 Salary 3,200
Office furniture on 1st April, 2019 3,000 Stationery & Printing 800
O/s Salary as on 1st April 2019 200
Prepaid Rent as on 1st April 2019 300
Goods invoiced from the head office 1,60,000 Petty expenses paid by the branch 600
(invoice price)
Goods return to Head Office 2,000 Discount allowed to debtors 160
Goods return by debtors 960 Furniture purchased by branch 8,000
From collections (01.10.2019)
Cash received from debtors 60,000 Abnormal Loss (Invoice Price) 5,000
Cash Sales 1,00,000 Insurance claim received 3,000
Credit sales 60,000 Depreciation to be provided on
branch furniture at 10% p.a.
O/s Salary as on 31st March 2020 350
Prepaid Rent as on 31st March 2020 500

Solution
Branch Account
Particulars Amount Particulars Amount
To Balance b/d By Balance b/d O/s Salary 200
Stock 30,000 By Stock Reserve (Opening) 6,000
{30,000 * 20/100}
Debtors 18,000 By Goods sent to branch (Loading) 32,000
{1,60,000 * 20/100}
Petty Cash 800 By Goods Returned to H.O. 2,000
Office furniture 3,000 By Bank (Remittances)
Prepaid Rent 300 Cash Sales 1,00,000
To Goods sent to branch 1,60,000 Collection from Debtors 60,000
To Goods returned to H.O. 400 Insurance Claim Rec. 3,000
(Loading) {2,000 * 20/100} Purchase of Furniture (8,000) 1,55,000
To Bank: By Balance c/d
Rent 1,800 Stock (W.N.-2) 23,960
Salary 3,200 Debtors (WN-1) 16,880
Stationery & Printing 800 Cash in hand (800 - 600) 200
To Stock Reserve (Closing) 4,792 Office furniture 10,300
{23,960 * 20/100} (3,000-10%)+(8000- 8000*10%*6/12)
To Balance c/d Prepaid Rent 500
O/s Salary 350
To Net Profit (Bal. Fig.) 23,598
2,47,040 2,47,040
WN-1
Memorandum Debtors A/c
To Balance b/d 18,000 By Bank 60,000
To Credit Sales 60,000 By Discount allowed 160
By Sale Returns 960
By Balance c/d (Bal. Fig) 16,880
78,000 78,000
WN-2
Memorandum Stock A/c
To Balance b/d 30,000 By Goods returned to HO 2,000
To Goods sent to branch 1,60,000 By Cash Sales 1,00,000
To Sales Returns 960 By Credit sales 60,000
By Abnormal Loss 5,000
By Balance c/d (Bal. Fig) 23,960
1,90,960 1,90,960

SOLVING SAME QUESTION WITH FINAL ACCOUNTS METHOD

Branch Trading and P & L A/c
Particulars Amount Particulars Amount
To Opening stock 24,000 By Sales:
(30,000-6,000)
To Goods sent 1,60,000 Cash 1,00,000
(-) Returns (2,000) Credit 60,000
(1,58,000-31,600) 1,26,400 ( - ) Sales Return (960) 1,59,040
By Abnormal Loss
(5,000-1,000) 4,000
To Gross Profit (Bal. Fig.) 31,808 By Closing stock 19,168
(23,960-4,792)
1,82,208 1,82,208
To Discount Allowed 160 By Gross Profit 31,808
To Abnormal Loss 1,000
(4,000-3,000)
To Rent (1800+300-500) 1,600
To Salary (3,200-200+350) 3,350
To Stationary & Printing 800
To Depreciation on 700
Furniture (300+400)
To Petty expenses 600
To Net Profit (Bal. Fig.) 23,598
31,808 31,808
 STOCK & DEBTOR SYSTEM
Branch Stock Account (At Invoice Price)
Particulars Amount Particulars Amount
To Balance b/d xx By Goods sent to branch (returns) xx
To Goods sent to branch xx By Bank (Cash Sales) xx
To Branch Debtors A/c (Returns) xx By Branch Debtors A/c (Credit Sale) xx
To Surplus transferred to Branch xx By Shortage/Abnormal Loss xx
adjustment a/c [SP > IP]
By Branch Adjustment (Normal loss) xx
By Balance c/d xx
XXX XXX
Note In case of Branch Stock Account, if Balance figure is on credit side then:
Case 1: Closing stock not given → then balance figure will be considered as Closing Stock.
Case 2: Closing stock is given → then consider the balance figure to be shortage/abnormal loss and separate the same accordingly
in Branch adjustment & Branch P&L account.
Branch Adjustment Account
Particulars Amount Particulars Amount
To Goods sent to branch-Returns (Loading) xx By Stock Reserve (Opening stock) xx
To Stock Reserve (Closing stock) xx By Goods sent to branch (Loading) xx
To Abnormal Loss (Loading) xx By Surplus tfd from Branch Stock A/c xx
To Branch Stock a/c (Normal loss) xx
To Branch P&L {Gross Profit} xx
XXX XXX
Branch Expenses Account
Particulars Amount Particulars Amount
To Bank A/c (expenses) xx By Branch P & L A/c xx
[salaries, rent & rates, other expense, etc.)
XXX XXX
Branch P & L Account
Particulars Amount Particulars Amount
To Branch Expenses A/c xx By Branch Adjustment (G.P.) xx
To Branch Debtors A/c : By Branch Cash a/c
Discount , Bad Debts xx (Claim received from insurance Co.) xx
To Abnormal Loss (Cost) xx
To Net Profit (Bal. Fig.) xx
XXX XXX

Goods Sent to Branch Account

Particulars Amount Particulars Amount
To Branch stock A/c xx By Branch stock A/c xx
To Branch Adjustment A/c xx By Branch Adjustment A/c xx
To Purchases/Trading A/c (Bal. Fig.) xx
XXX XXX
Branch Debtors Account
Particulars Amount Particulars Amount
To Balance b/d xx By Branch stock A/c (Returns) xx
To Branch stock A/c (Credit Sales) xx By Branch P&L A/c (Discount, Bad xx
Debts, etc.)
By Bank A/c (Collection) xx
By Balance c/d xx
XXX XXX

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Question
X & Co. invoices goods to its branch at cost plus 33 1/3%. Prepare ledger accounts as per Stock &
Debtors System as they would appear in the books of head office.
Stock at commencement at Branch at invoice Price 3,60,000
Branch Debtors as on 1st April 2019 2,00,000
Stock at close at Branch at Invoice Price 2,88,000
Goods sent to Branch during the year at invoice price 24,00,000
(including goods invoiced at Rs. 48,000 to Branch on
31.03.2020 but not received by Branch before close of the year).
Return of goods to head office (invoice Price) 1,20,000
Sales return by Debtors to Branch 20,000
Credit Sales at Branch 1,40,000
Invoice value of goods pilfered 24,000
Insurance Claim Received 10,000
Normal loss at Branch due to wastage and deterioration of stock 36,000
(at invoice price)
Cash Sales at Branch 21,60,000
Branch Expenses paid by Head Office 20,000
Discount Allowed 5,000
Collection from Debtors 1,80,000
X & Co. closes its books on 31st March, 2020

Solution

Branch Stock Account

Particulars Amount Particulars Amount
To Balance b/d 3,60,000 By Goods sent to branch (returns) 1,20,000
To Goods sent to branch 24,00,000 By Bank (Cash Sales) 21,60,000
To Branch Debtors A/c (Sales 20,000 By Branch Debtors A/c (Credit Sale) 1,40,000
Return)
To Surplus (Bal.Fig.) 36,000 By Goods Pilfered (Abnormal loss) 24,000
By Branch Adjustment (Normal Loss) 36,000
By Balance c/d
In Hand 2,88,000
In Transit 48,000
28,16,000 28,16,000

Branch Adjustment Account

Particulars Amount Particulars Amount
To Goods sent to branch-Returns 30,000 By Stock Reserve (Opening stock) 90,000
(Loading) [1,20,000  25%] [3,60,000  25%]
To Goods Pilfered (Loading on 6,000 By Goods sent to branch (Loading) 6,00,000
Abnormal Loss) [24,000  25%] [24,00,000  25%]
To Branch Stock A/c (Normal 36,000 By Surplus 36,000
Loss)
By Stock Reserve (Closing stock) 84,000
[3,36,000  25%]
To Branch P&L {G.P} (Bal. Fig) 5,70,000
7,26,000 7,26,000
 Branch Expenses Account
Particulars Amount Particulars Amount
To Bank A/c (expenses) 20,000 By Branch P & L A/c ( Bal. Fig.) 20,000
20,000 20,000

Branch P & L Account

Particulars Amount Particulars Amount
To Goods Pilfered (Cost of 18,000 By Branch Adjustment (G.P.) 5,70,000
Abnormal Loss) [24,000  75%]
To Branch Expenses 20,000 By Bank ( Insurance Claim) 10,000
To Branch Debtors
(Discount Allowed) 5,000
To Net Profit (Bal. Fig.) 5,37,000
5,80,000 5,80,000

Goods Sent to Branch Account

Particulars Amount Particulars Amount
To Branch stock A/c 1,20,000 By Branch stock A/c 24,00,000
To Branch Adjustment A/c 6,00,000 By Branch Adjustment A/c 30,000
To Purchases (Bal. Fig.) 17,10,000
24,30,000 24,30,000

Branch Debtors Account

Particulars Amount Particulars Amount
To Balance b/d 2,00,000 By Branch stock A/c (Returns) 20,000
To Branch stock A/c (Credit Sales) 1,40,000 By Branch P&L A/c (Discount) 5,000
By Bank A/c (Collection) 1,80,000
By Balance c/d (Bal. Fig.) 1,35,000
3,40,000 3,40,000
 WHOLESALE PRICE METHOD

TRADING AND P & L A/C

Particulars Head Office Branch Particulars Head Office Branch
To Opening stock   By Goods sent to Branch  
To Purchases   By Sales  
To Goods Received from Head Office   By Closing Stock  
To Gross Profit   
XXX XXX XXX XXX
To Indirect expenses   By Gross Profit  
To Stock Reserve  
To Net Profit  
XXX XXX XXX XXX

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Question
M/s. Ravi having Head Office at Delhi has a Branch at Kolkata. The Head Office does wholesale trade
only at cost plus 80%. The Goods are sent to Branch at the wholesale price viz. cost plus 80%. The
Branch at Kolkata wholly engaged in retail trade and the goods are sold at cost to Head Office plus
100%.
Following details are furnished for the year ended 31st March, 2020:
Head Office Kolkata Branch
Opening Stock (As on 01.04.2019) 1,25,000 36,000
Purchases 21,50,000 -
Goods sent to Branch (cost to H.O. plus 80%) 7,38,000
Sales 23,79,600 7,30,000
Office Expenses 50,000 4,500
Staff Salary 45,000 8,000
You are required to prepare Trading and Profit & Loss Account of the Head Office and Branch for the
Year ended 31st March, 2020.

Solution
Trading and P&L Account
Particulars H.O Branch Particulars H.O Branch
To Opening stock 1,25,000 36,000 By Goods sent to branch 7,38,000 -
To Purchases 21,50,000 - By Sales 23,79,600 7,30,000
To Goods received from - 7,38,000 By Closing Stock 5,43,000 1,17,000
HO (WN-1 & 2)
To Gross Profit 13,85,600 73,000
36,60,600 8,47,000 36,60,600 8,47,000
To Office Expenses 50,000 4,500 By Gross Profit 13,85,600 73,000
To Staff Salaries 45,000 8,000 By Stock Reserve 16,000
(Opening) (WN-3)
To Stock Reserve 52,000 -
(Closing) (WN3)
To Net Profit (Bal. Fig.) 12,54,600 60,500
14,01,600 73,000 14,01,600 73,000

WN-1 Calculation of closing stock of Head Office

Opening Stock of Head Office 1,25,000
Goods purchased by Head Office 21,50,000
22,75,000
Less : Cost of goods sold [31,17,600 *100/180] (17,32,000)
Closing Stock 5,43,000
WN-2 Calculation of closing stock of Branch
Opening Stock of Branch 36,000
Goods received from Head Office (At Invoice Value) 7,38,000
Less : Invoice value of goods sold [7,30,000 *180/200] (6,57,000)
Closing Stock 1,17,000
WN-3 Calculation of unrealized profit in branch stock:
Closing Opening
Branch stock 1,17,000 36,000
Profit Included 80% of cost 80% of cost
Unrealized Profit 1,17,000 *80/180 = 52,000 36,000 *80/180 = 16,000
 INDEPENDENT BRANCH

Features of Accounting System

1. Branch maintains its entire book of accounts under double entry system.
2. Branch opens in its books a Head Office Account to record all the transactions that takes place between Head
Office & Branch.
3. Head Office maintains a Branch account to record these transactions.
4. Branch prepares its trial balance, Trading & P & L a/c at the end of accounting period & sends copy of these
statements to Head Office for incorporation.
5. After receiving final statement from branch, Head Office reconciles between the two – Branch A/c in Head
Office Books & Head Office A/c in Branch Books.
6. Head Office prepares necessary entries to incorporate Branch trial balance in its books.

JOURNAL ENTRIES

S. No. Transaction Books of H.O Books of Branch

1 Goods Dispatched by Head Office Branch A/c Dr. Goods Rec. from HO A/c Dr.
To Goods Sent to Branch A/c To HO A/c
2 Goods Returned by Branch Goods Sent to Branch A/c Dr. HO A/c Dr.
To Branch A/c To Goods Rec. from HO A/c
3 Remittance by Branch to Head Office Cash & Bank A/c Dr. HO A/c Dr.
To Branch A/c To Cash & Bank A/c
4 Head Office sending cash to Branch Branch A/c Dr. Cash & Bank A/c Dr.
To Cash & Bank A/c To HO A/c
5 Direct purchases by Branch No Entry Purchases A/c Dr.
To Cash/Creditors A/c
6 Purchases by Branch but payment by HO Branch A/c Dr. Purchases A/c Dr.
To Cash/Creditors A/c To HO A/c
7 Sales by Branch No Entry Cash / Debtors A/c Dr.
To Sales A/c
8 Collection from Debtors by branch No Entry Cash & Bank A/c Dr.
To Debtors A/c
9 Collection from Debtors directly by HO Cash & Bank A/c Dr. HO A/c Dr.
To Branch A/c To Debtors A/c
10 Expenses incurred at Branch No Entry Expenses A/c Dr.
To Cash & Bank A/c
11 Expenses of Branch paid by Head Office Branch A/c Dr. Expenses A/c Dr.
To Cash & Bank A/c To HO A/c
12 Head Office expenses charged to Branch Branch A/c Dr. Expenses A/c Dr.
(Allocation to Branch) To Expenses A/c To HO A/c
13 Transfer of goods from one branch to Sending Branch
another HO A/c Dr.
Receiving Branch A/c Dr. To Goods Rec. from HO A/c
To Sending Branch A/c Receiving Branch
Goods Rec. from HO A/c Dr.
To HO A/c
14 Fixed Assets A/c maintained at Branch

a) Fixed Asset purchased by Branch No Entry Fixed Assets A/c Dr.

To Cash & Bank A/c
b) Fixed Asset purchased by Branch paid by Branch A/c Dr. Fixed Assets A/c Dr.
Head Office To Cash & Bank A/c To HO A/c
c) Depreciation on the above No Entry Depreciation A/c Dr.
To Fixed Assets A/c

Branch Acc pdf Page 6

 To Fixed Assets A/c
15 Fixed Asset A/c maintained at HO

a) Fixed asset purchased at Branch & Branch Fixed Assets A/c Dr. HO A/c Dr.
recorded at Head Office Books To Branch A/c To Cash & Bank A/c
b) Branch Fixed Asset recorded in HO books Branch Fixed Assets A/c Dr. No Entry
& payment by HO To Cash & Bank A/c
c) Depreciation on the above Branch A/c Dr. Depreciation A/c Dr.
To Branch Fixed Assets A/c To HO A/c
16 Goods in Transit No Entry Goods in Transit A/c Dr.
To HO A/c
17 Cash in Transit Cash in Transit A/c Dr. No Entry
To Branch A/c

Branch Acc pdf Page 7

Question
Pass necessary Journal Entries (with narration) in the books of branch to rectify or adjust the following:
a) Branch Paid Rs. 20,000 as salary to HO Supervisor and the amount was debited to Salaries Account
by the branch.
b) Head Office Expenses allocated to branch were Rs. 15,000, but these expenditure were not recorded
by the branch.
c) HO collected Rs. 70,000 directly from the customer on branch’s behalf.
d) Branch has sent remittance of Rs. 1,50,000 but the same has not yet been received by HO.
e) Branch assets accounts retained at head office, depreciation charged for the year Rs. 15,000 not
recorded by Branch.
f) Goods dispatched by the Head office amounting to Rs. 50,000, but not received by the Branch till date
of reconciliation.

Solution
Entries in the Books of Branch
S.No. Particulars L.F. Dr. Amount Cr. Amount
(a) Head Office A/c Dr. 20,000
To Salaries A/c 20,000
(Being the rectification of salary paid on behalf of H.O.)
(b) Expenses A/c Dr. 15,000
To Head Office A/c 15,000
(Being the allocated expenditure by the head office
recorded in branch books)
(c) Head Office A/c Dr. 70,000
To Debtors A/c 70,000
(Being the adjustment of collection from branch debtors)
(d) No entry in the books of branch for remittance sent by
branch not received by Head Office till end of year
(e) Depreciation A/c Dr. 15,000
To Head Office A/c 15,000
(Being depreciation of assets accounted for)
(f) Goods in transit A/c Dr. 50,000
To Head Office A/c 50,000
(Being goods sent by Head Office still in-transit)
Note: In entry (d) the cash in transit entry will be passed in the Books of the Head Office.

Question
Show adjustment Journal entry alongwith working notes in the books of Head Office at the end of April,
2020 for incorporation of inter-branch transactions assuming that only Head Office maintains different
branch account in its books.

A. Delhi Branch:
(1) Received goods from Mumbai – Rs. 1,40,000 and Rs. 60,000 from Kolkata.
(2) Sent goods to Chennai – Rs. 1,00,000, Kolkata – Rs. 80,000.
(3) Bill Receivable received – Rs. 80,000 from Chennai.
(4) Acceptances sent to Mumbai – Rs. 1,00,000, Kolkata – Rs. 40,000.
B. Mumbai Branch (apart from the above):
(5) Received goods from Kolkata – Rs. 60,000, Delhi – Rs. 80,000.
(6) Cash sent to Delhi – Rs. 60,000, Kolkata – Rs. 28,000.
C. Chennai Branch (apart from the above):
 (7) Received goods from Kolkata – Rs. 1,20,000.
(8) Acceptances and Cash sent to Kolkata – Rs. 80,000 and Rs.40,000 respectively.
D. Kolkata Branch (apart from the above):
(9) Sent goods, cash & Acceptances to Chennai – Rs. 2,60,000

Solution
Journal Entry in the Books of Head Office
Date Particulars L.F. Dr. Amount Cr. Amount
30.04.2020 Mumbai Branch A/c Dr. 12,000
Chennai Branch A/c Dr. 2,80,000
To Delhi Branch A/c 60,000
To Kolkata Branch A/c 2,32,000
(Being adjustment entry passed by HO in respect of
inter-branch transactions for month of April, 2020)
Working Note:
Inter – Branch transactions
Delhi Mumbai Chennai Kolkata
A. Delhi Branch
(1) Received goods 2,00,000 (Dr.) 1,40,000 (Cr.) 60,000 (Cr.)
(2) Sent goods 1,80,000 (Cr.) 1,00,000 (Dr.) 80,000 (Dr.)
(3) Received B/R 80,000 (Dr.) 80,000 (Cr.)
(4) Sent acceptance 1,40,000 (Cr.) 1,00,000 (Dr.) 40,000 (Dr.)
B. Mumbai Branch
(5) Received goods 80,000 (Cr.) 1,40,000 (Dr.) 60,000 (Cr.)
(6) Sent cash 60,000 (Dr.) 88,000 (Cr.) 28,000 (Dr.)
C. Chennai Branch
(7) Received goods 1,20,000 (Dr.) 1,20,000 (Cr.)
(8) Sent cash & acceptances 1,20,000 (Cr.) 1,20,000 (Dr.)
D. Kolkata Branch
(9) Sent goods 2,60,000 (Dr.) 2,60,000 (Cr.)
60,000 (Cr.) 12,000 (Dr.) 2,80,000 (Dr.) 2,32,000 (Cr.)
Branch Acc pdf Page 8
IFO It is a foreign operation, the activities of which are integral part of those of the reporting enterprise.
The business of IFO is carried on as if it were an extension of the reporting enterprises operations.
NIFO It is a foreign operation that is not an integral foreign operation. The business of NIFO is carried
on in substantially independent way by accumulating cash & other monetary items, incurring
expenses, generating income & arranging borrowing in its own local currency.
Conversion Rates
Particulars IFO NIFO
1. Opening Stock Opening rate Opening rate
2. Expenses & Incomes Average rate Average rate
3. Closing Assets & Liabilities Closing rate Closing rate
(Other than Fixed Assets)
4. Fixed Assets (& Depreciation) Actual rate on purchase date Closing rate
5. Goods received from Head Office
/Remittance to HO and Head Office Value appearing in HO Trial Value appearing in HO Trial
account balance Balance Balance

6. Difference in Trial Balance Transferred to P&L A/c as Transferred to Foreign Currency

(Exchange Difference) Exchange Gain/Loss Translation Reserve A/c in
Balance sheet

Branch Acc pdf Page 9

Question
Omega has a branch at Washington. Its Trial Balance as at 30th September, 2020 is as follows:
Dr. (US $) Cr. (US $)
Plant and machinery 1,20,000 -
Furniture and fixtures 8,000 -
Stock, Oct. 1, 2019 56,000 -
Purchases 2,40,000 -
Sales - 4,16,000
Goods from Omega (H.O.) 80,000 -
Wages 2,000 -
Carriage inward 1,000 -
Office Expenses 10,000 -
Head Office A/c - 1,14,000
Trade debtors 24,000 -
Trade creditors - 17,000
Cash at bank 5,000 -
Cash in hand 1,000 -
5,47,000 5,47,000
The following further information is given:
(1) Wages outstanding – $ 1,000.
(2) Depreciate Plant and Machinery and Furniture and Fixtures @ 10 % p.a.
(3) The Head Office sent goods to Branch for Rs. 39,40,000.
(4) The Head Office shows an amount of Rs. 43,00,000 due from Branch.
(5) Stock on 30th September, 2020 – $ 52,000.
(6) There were no in transit items either at the start or at the end of the year.
(7) On September 1, 2018, when fixed assets were purchased, the rate of exchange was Rs. 38 to one $.
On October 1, 2019, the rate was Rs. 39 to one $.
On September 30, 2020, the rate was Rs. 41 to one $.
Average rate during the year was Rs. 40 to one $.
You are asked to prepare:
(a) Trial balance incorporating adjustments given under 1 to 4 above, converting dollars into rupees.
(b) Trading and Profit and Loss Account for the year ended 30th September, 2020 and Balance Sheet as
on that date depicting the profitability and net position of the Branch as would appear in India for
the purpose of incorporating in the main Balance Sheet

Solution
Washington Branch Trial Balance (in Rupees)
As on 30th September, 2020
Dr. Cr. Conversion
Particulars Dr. (in Rs.) Cr. (in Rs.)
(In US $) (in US $) Rate
Plant & Machinery 1,08,000 38 41,04,000
Furniture & Fixtures 7,200 38 2,73,600
Depreciation on
P&M =12,000 12,800 38 4,86,400
F&F = 800
Stock (01/10/19) 56,000 39 21,84,000
Purchases 2,40,000 40 96,00,000
Sales 4,16,000 40 1,66,40,000
Goods from HO (Omega) 80,000 Actual 39,40,000
Wages 2,000 3,000 40 1,20,000
 (+) O/S 1,000
Carriages inward 1,000 40 40,000
Office Expenses 10,000 40 4,00,000
Head Office A/c 1,14,000 Actual 43,00,000
Debtors 24,000 41 9,84,000
Creditors 17,000 41 6,97,000
Cash at Bank 5,000 41 2,05,000
Cash in hand 1,000 41 41,000
O/s Wages 1,000 41 41,000
Exchange gain (Bal. Fig.) 7,00,000
2,23,78,000 2,23,78,000

Trading and P&L A/c

Particulars Amount Particulars Amount
To Opening stock 21,84,000 By Sales 1,66,40,000
To Goods from Head Office 39,40,000 By Closing Stock (52,000 x 41) 21,32,000
To Purchases 96,00,000
To Carriage inward 40,000
To Wages 1,20,000
To Gross Profit (Bal. Fig.) 28,88,000
1,87,72,000 1,87,72,000
To Depreciation 4,86,400 By Gross Profit 28,88,000
To Office Expenses 4,00,000 By Exchange gain 7,00,000
To Net Profit (Bal. Fig.) 27,01,600
35,88,000 35,88,000

Balance Sheet
Liabilities Amount Assets Amount
Head Office 43,00,000 Plant & Machinery 41,04,000
( + ) NP 27,01,600 70,01,600 Furniture & Fixtures 2,73,600
Creditors 6,97,000 Stock 21,32,000
O/s Wages 41,000 Debtors 9,84,000
Cash at Bank 2,05,000
Cash in Hand 41,000
77,39,600 77,39,600
Note: The above solution has been given assuming that the Washington branch is Integral foreign
operation of the Omega