JAI PRAKASH LTD.
Branch Accounting - Stock and Debtor System
For the year ended 31st March 2022
Mumbai Branch Stock Account
Dr. Cr.
To Balance b/d By Goods Returned to H.O.
Rs. 216,000 Rs. 100,800
To Goods Received from H.O. By Sales (Cash + Credit)
Rs. 252,000 Rs. 316,800
By Normal Pilferage
Rs. 4,800
By Fire Loss
Rs. 6,000
By Balance c/d
Rs. 39,600
Rs. 468,000 Rs. 468,000
Mumbai Branch Debtors Account
Dr. Cr.
To Balance b/d By Goods Returned
Rs. 20,000 Rs. 75,000
To Credit Sales (at List Price) By Discount Allowed
Rs. 300,000 Rs. 27,000
By Cash Received
Rs. 173,000
By Balance c/d
Rs. 45,000
Rs. 320,000 Rs. 320,000
Mumbai Branch Adjustment Account
Dr. Cr.
To Goods Returned to H.O. (Loading) By Opening Stock (Loading)
Rs. 16,800 Rs. 36,000
To Closing Stock (Loading) By Goods Sent to Branch (Loading)
Rs. 6,600 Rs. 44,000
To Normal Pilferage (Loading)
Rs. 800
To Fire Loss (Loading)
Rs. 1,000
To Branch P&L A/c
Rs. 54,800
Rs. 80,000 Rs. 80,000
Mumbai Branch Expenses Account
Dr. Cr.
To H.O. (Expenses paid) By Branch P&L A/c
Rs. 15,000 Rs. 21,625
To Insurance Expense
Rs. 3,000
To Outstanding Expenses
Rs. 3,625
Rs. 21,625 Rs. 21,625
Mumbai Branch Profit and Loss Account
Dr. Cr.
To Branch Stock A/c (Sales) By Branch Stock A/c (COGS)
Rs. 316,800 Rs. 316,800
To Gross Profit c/d
Rs. 0
Dr. Cr.
Rs. 316,800 Rs. 316,800
By Gross Profit b/d
Rs. 0
To Branch Expenses By Branch Adjustment A/c (Loading)
Rs. 21,625 Rs. 54,800
To Manager's Commission By Insurance Recovery
Rs. 1,770 Rs. 4,000
To Net Profit (to H.O.)
Rs. 35,405
Rs. 58,800 Rs. 58,800
Goods Sent to Branch Account (In H.O. Books)
Dr. Cr.
To Goods Returned by Branch By Goods Sent to Branch
Rs. 84,000 Rs. 220,000
To Trading A/c (Profit) By Balance b/d (Stock at Branch)
Rs. 35,405 Rs. 180,000
To Balance c/d (Stock at Branch) By Balance b/d (Debtors)
Rs. 33,000 Rs. 20,000
To Balance c/d (Debtors - Gross) By Branch Expenses
Rs. 45,000 Rs. 19,000
To Balance c/d (Provision) By Insurance Recovery
Rs. 6,075 Rs. 4,000
To Balance c/d (Insurance Prepaid) By Cash from Debtors
Rs. 1,000 Rs. 173,000
To Balance c/d (Expenses O/s) By Discount Allowed
Rs. 3,625 Rs. 27,000
By Manager's Commission
Rs. 428,105 Rs. 1,770
Rs. 644,770
By Balance c/d (Debtors - Net)
Rs. 38,925
Dr. Cr.
Rs. 644,770
WORKING
1. Pricing Structure:
• Cost = 100, List Price = Cost + 50% = 150
• Invoice Price = List Price - 20% = 150 × 0.80 = 120
• Invoice Price = 120% of Cost
• Loading = 20% of Cost
2. Credit Sales Calculation:
From Debtors Account:
Opening (20,000) + Credit Sales - Returns (75,000) - Discount (27,000) - Cash (173,000) = Closing
(45,000)
Credit Sales = Rs. 300,000
3. Cash Sales Calculation:
Net Credit Sales = 300,000 - 75,000 - 27,000 = Rs. 198,000
Cash Sales = 60% of 198,000 = Rs. 118,800
4. Manager's Commission:
Net Profit Before Commission = Rs. 37,175
Commission = (5% × 37,175) ÷ 1.05 = Rs. 1,770
Net Profit After Commission = Rs. 35,405
5. Insurance Premium:
Total Premium = Rs. 4,000 (for year ending 30th June 2022)
Expense for current year (9 months) = Rs. 3,000
Prepaid for next year (3 months) = Rs. 1,000
6. Closing Debtors (Net):
Gross Debtors = Rs. 45,000
Less: Provision for Discount = Rs. 6,075
Net Debtors = Rs. 38,925
