# Accounting for Branches Including Foreign Branches – CA Inter Accounts Study Material

Accounting for Branches Including Foreign Branches – CA Inter Accounting Study Material is designed strictly as per the latest syllabus and exam pattern.

## Accounting for Branches Including Foreign Branches – CA Inter Accounts Study Material

Theory Questions

Question 1.
Why goods are marked on invoice price by the head office while sending goods to the branch? (4 Marks) (May 2011)
Goods are marked on invoice price to achieve the following objectives:

1. To keep secret from the branch manager, the cost price of the goods and profit made, so that the branch manager may not start a rival and competitive business with the concern; and
2. To have effective control on stock i.e. stock at any time must be equal to opening stock plus goods received from head office minus sales made at branch.
3. To dictate pricing policy to its branches, as well as save work at branch because prices have already been decided.

Debtors Method

Question 2.
Widespread invoices goods to its branch at cost plus 20%. The branch sells goods for cash as well as on credit. The branch meets its expenses out of cash collected from its debtors and cash sales and remits the balance of cash to head office after withholding ₹ 10,000 necessary for meeting immediate requirements of cash. On 31st March, 20X1 the assets at the branch were as follows:

During the accounting year ended 31st March, 20X2 the invoice price of goods dispatched by the head office to the branch amounted to ₹ 1 crore 32 lakhs. Out of the goods received by it, the branch sent back to head office goods invoiced at ₹ 72,000. Other transactions at the branch during the year were as follows:

On 1st January, 20X2 the branch purchased new furniture for ₹ 1 lakh for which payment was made by head office through a cheque.

On 31 st March, 20X2 branch expenses amounting to ₹ 6,000 were outstanding and cash in hand was again ₹ 10,000. Furniture is subject to depreciation @ 16% per annum on diminishing balance method.
Prepare Branch Account in the books of head office for the year ended 31st March, 20X2. (16 Marks) (May 2001)
In the Head Office Books Branch Account for the year ended 31st March, 20X2

Working Notes:

1. Invoice price and cost
Let cost be 100
So, invoice price 120

2. Invoice price of closing stock in branch
Branch Stock Account

3. Closing balance of branch debtors
Branch Debtors

4. Closing balance of furniture and fittings
Branch Furniture and Fittings Account

Note: Since the new furniture was purchased on 1st Jan 20X2 depreciation will be for 3 months.
5. Remittance by branch to head office
Branch Cash Account

Question 3.
Fanna Cloth Mills opened a branch at Mumbai on 1st April, 2011. The goods were invoiced to the branch at selling price which was 125% of the cost to the head office.
The following are the particulars of the transactions relating to branch during the year ended 31st March, 2012:

Prepare Branch Account based on invoice price under Debtors method for ascertaining profit for the year ended 31st March, 2012. (RTPMay 2013)
Branch Account

Working Notes:

1. Memorandum Branch Stock Account

2. Memorandum Branch Debtors Account

Question 4.
M/s. X has a branch at Delhi and the goods are Invoiced to branch at a profit of 20% on invoice price. Head Office paid all the branch expenses from its bank account, except petty cash expenses which were met by the branch. Branch expenses directly paid by M/s X on behalf of Delhi branch amounted to ₹ 20,000. Following information Is available of the transactions at Delhi branch for the year ended 31st December, 2012:

You are required to prepare Delhi Branch account (on cost basis) in the books of M/s X under Debtors System. (RTP)
In the Books’ of M/s X
Delhi Branch Account

Working Notes:

1.

2. Petty expenses

Question 5.
From the following particulars relating to Pune branch for the year ending December 31, 2013, prepare Branch Account in the books of Head office.

Goods costing ₹ 1,200 were destroyed on account of fire and a sum of ₹ 1,000 was received from the Insurance Company. (RTP)
Pune Branch Account

NOTE: Alternatively, the amount of liabilities could have been deducted from assets.

Working Note:

Question 6.
XYZ Company is having its Branch at Kolkata. Goods are invoiced to the branch at 20% profit on sale. Branch has been instructed to send all cash daily to head office. All expenses are paid by head office except petty expenses which are met by the Branch Manager. From the following particulars prepare branch account in the books of Head Office.

(8 Marks) (May 2011)
In the books of Head Office – XYZ
Company Kolkata Branch Account (at invoice)

Working Notes

Debtors Account

Note: It is assumed that goods returned by branch are at invoice price.

Question 7.
LMN is having branch at Mumbai. Goods are invoiced to the branch at 25% profit on sale. Branch has been instructed to send all cash daily to head office. All expenses are paid by head office except petty expenses, which are met by the Branch. From the following particulars, prepare branch account in the books of head office:

(Nov. 2014)
In the books of Head Office – LMN
Mumbai Branch Account (At invoice price)

Working Note:

Debtors Account

Note: It is assumed that goods returned by branch are at invoice price.

Question 8.
M/s Rahul operates a number of retail outlets to which goods are invoiced at wholesale price which is cost plus 25%. These outlets sell the goods at the retail price which is wholesale price plus 20%.
Following is the information regarding one of the outlets for the year ended 31.3.20X2:

You are required to prepare the following accounts in the books of Rahul Limited for the year ended 31.3.20X2:
(a) Outlet Stock Account.
(b) Outlet Profit & Loss Account.
(c) Stock Reserve Account (Exam Question)
Outlet Stock Account

Outlet Profit & Loss Account

Stock Reserve Account

Working Notes:

(1)

(2) Goods lost by fire ₹
Opening Stock + Goods Sent + Gross Profit – Sales – Closing Stock
30,000 + 3,24,000 + 60,000 – 3,60,000 – 36,000 = ₹ 18,000

(3) Stock Reserve
Opening Stock = 30,000 × 25/125 = 6,000
Closing Stock = 36,000 × 25/125 = ₹ 7,200

Question 9.
Using the Stock and Debtors system, find out the profit or loss made at the Kolkata Branch in 2014.

Goods are invoiced to the Branch at the selling price so as to show a profit of 30% on invoice price. (RTP Nov 2014)
Branch Stock Account

Branch Debtors Account

Branch Expenses Account

Goods Sent to Branch Account

Branch Profit and Loss Account

Question 10.
Ram Limited of Chennai has a branch at Nagpur to which office, goods are invoiced at cost plus 25%. The branch makes sales both for cash and on credit. Branch expenses are paid direct from Head Office and the branch has to remit all cash received into the Head Office Bank Account at Nagpur.

From the following details, relating to the year 2009, prepare the accounts in Head Office Ledger and ascertain Branch Profit as per stock and debtors method. Branch does not maintain any books of account, but sends weekly returns to head office:

(8 Marks) (May 2010)
Nagpur Branch Stock Account

Branch Profit & Loss Account

Branch Expenses Account

Branch Debtors Account

Goods sent to Branch Account

Question 11.
M/s Marena, Delhi has a branch at Bangalore to which office goods are invoiced at cost plus 25%. The branch sells both for cash and on credit. Branch Expenses are paid direct from head office and the Branch has to remit all cash received into the Head Office Bank Account.

From the following details, relating to calendar year 2017, prepare the accounts in the Head Office Ledger and ascertain the Branch Profit.

Branch does not maintain any books of account, but sends weekly returns to the Head Office.

(8 Marks) (May 2018)
Bangalore Branch Stock Account

* Alternatively, this may directly be transferred to Branch P&L A/c without routing it through Branch Adjustment Account.

Branch Profit & Loss Account

Branch Expenses Account

Branch Debtors Account

Goods sent to Branch Account

Note: The answer has been given on ‘Stock and Debtors Method’. As the question is silent on the method to be adopted, an alternate answer is also possible.

Question 12.
Ayan Ltd. invoices goods to its branch at cost plus 331/3%. From the following particulars prepare Branch Stock Account, Branch Stock Adjustment Account and Branch Profit and Loss Account as they would appear in the books of head office.

Ayan closes its books on 31st March, 2018. (10 Marks) (May 2018)
In the books of Head Office Branch Stock Account

* Alternatively, combined posting for the amount of ₹ 24,000 may be passed through Goods pilfered account.
** Alternatively, it may first be transferred to normal Loss account which may ultimately be closed by transfer to Branch Adjustment account. The final amount of net profit will however remain same.
*** It has been assumed that the surplus may be due to sale of goods by branch at price higher than invoice price.

Branch Profit and Loss Account

Final Accounts Method

Question 13.
L Ltd. has its head office at Mumbai and two branches at Pune and Goa. The branches purchase goods independently. The Pune branch makes a profit of 33-1/3% on cost which the Goa branch makes a profit of 20% on sales. Goods are also supplied by one branch to another at the respective sales price. From the following particulars, prepare the Trading and Profit and Loss Account of each of the branches and find out the profit or loss made by each of them after taking into account the reserve for unrealised profits:

Information:

(i) Opening stock at Pune Branch includes goods of ₹ 10,000 taken from Goa Branch,
(ii) Opening stock at Goa Branch includes goods of ₹ 17,000 taken from Pune Branch at cost to receiving branch,
(Hi) The Pune Branch sales includes transfer of goods to Goa Branch at selling price ₹ 20,000
(iv) The sales of Goa Branch include transfer of goods to Pune Branch at selling price ₹ 15,000.
(v) Closing stock at Pune Branch includes goods received from Goa Branch ₹ 5,000.
(vi) Closing stock at Goa Branch includes goods of ₹ 4,000 received from Pune Branch. (RTP May 2017)
Pune Branch Trading and Profit and Loss Account

Goa Branch Trading and Profit and Loss Account
For the year ending on ………..

Goa Branch Trading and Profit and Loss Account
For the year ending on ………..

Question 14.
Following is the information of the Jammu branch of Best Ltd., New Delhi for the year ending 31st March, 2010 from the following:

1. Goods are invoiced to the branch at cost plus 20%.
2. The sale price is cost plus 50%.
3. Other informations:

Stock as on 1.4.2009 ₹ 2,20,000
Goods sent during the year ₹ 11,00,000
Sales during the year ₹ 12,00,000
Expenses incurred at the branch ₹ 45,000
Ascertain

1. the profit earned by the branch during the year
2. branch stock reserve in respect of unrealized profit. (4 Marks) (Nov. 2010)

(i) Calculation of profit earned by the branch
In the books of Jammu Branch

(ii) Stock reserve in respect of unrealised profit
= ₹ 3,60,000 × (20/120) = ₹ 60,000

Working Note:

Calculation of closing stock at invoice price

Note: It is assumed that all figures given in the questions is at invoice price.

Debtors + Stock And Debtors + Final Accounts Method

Question 15.
Alpha Ltd. has a retail shop under the supervision of a manager. The ratio of gross profit at selling price is constant at 25 per cent throughout the year to 31st March, 2017.

Branch manager is entitled to a commission of 10 per cent of the profit earned by his branch, calculated before charging his commission but subject to a deduction from such commission equal in 25 per cent of any ascertained deficiency of branch stock. All goods were supplied to the branch in head office.
From the under mentioned figures, calculate the commission due to manager for the year ended 31st March, 2017.

(RTF) (May 2018)
Step 1: Calculation of Deficiency
Branch stock account (at invoice price)

Step 2: Calculation of Net Profit before Commission
Branch account

Step 3: Calculation of Commission still due to manager

Question 16.
Mr. Chena Swami of Chennai trades in Refined Oil and Ghee. It has a branch at Salem. He despatches 30 tins of Refined Oil @ ₹ 1,500 per tin and 20 tins of Ghee ₹ 5,000 per tin on 1st of every month. The Branch has incurred expenditure of ₹ 45,890 which is met out of its collections; this is in addition to expenditure directly paid by Head Office.
Following are the other details:

Chennai H.O.

Salem Branch Office

1. Addition to Building on 1-4-2015 ₹ 2,41,600 by H.O.
2. Rate of depreciation: Furniture & Fixtures @ 10% and Building @ 5% (already adjusted in the above figure)
3. The Branch Manager is entitled to 10% commission on overall organ-isational profits after charging such commission.
4. The General Manager is entitled to a salary of ₹ 20,000 per month.
5. General expenses incurred by Head Office is ₹ 1,86,000.
You are requested to prepare Branch Account in the Head Office books and also prepare Chena Swami’s Trading and Profit & Loss Account (excluding branch transactions) for the year ended 31st March, 2016. (8 Marks) (Nov. 2016)

In the books of Mr. Chena Swami
Salem Branch Account

Mr. Chena Swarni
Trading and Profit and Loss account for the year ended 31st March, 2016
(Excluding branch transactions)

Working Notes:

(1) Debtors Account

(2) Branch Cash Account

Notes:

1. Branch managers generally get commission based on the Branch profits and not on overall organizational profits. The answer given above is on the basis of the information given in the question and the commission of branch manager is computed as 10% on overall organizational profits after charging such commission.

2. Since the amount of cash sales was not given specifically in the question, total amount of cash collections during the year amounting s 20,15,000 has been considered as collection from Debtors in the above answer.

Wholesale Branch Method

Question 17.
M/s. Sandeep having Head Office at Deihi 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, 2014:

You are required to prepare Trading and Profit & Loss Account of the Head Office and Branch for the Year ended 31st March, 2014. (8 Marks) (May 2015)
Trading and Profit and Loss A/c
For the year ended 31st March 2014

Working Notes:

Independent Branches – Journal Entries

Question 18.
Show adjustment Journal entry in the books of Head Office at the end of April, 2014 for incorporation of inter-branch transactions assuming that only Head Office maintains different branch accounts in its books.

A. A.P. Branch:

(1) Received goods from M.P. – ₹ 30,000 and ₹ 25,000 from U.P.
(2) Sent goods to W.B. – ₹ 20,000, U.P. – ₹ 30,000.
(3) Bill Receivable received – ₹ 10,000 from W.B.
(4) Acceptances sent to M.P. – ₹ 10,000, U.P. – ₹ 20,000.

B. M.P. Branch (apart from the above) :

(5) Received goods from U.P. – ₹ 20,000, A.P – ₹ 10,000.
(6) Cash sent to A.P – ₹ 20,000, U.P. – ₹ 10,000.

C. W.B. Branch (apart from the above) :

(7) Received goods from U.P. – ₹ 40,000.
(8) Acceptances and Cash sent to U.P. – ₹ 10,000 and ₹ 15,000 re-spectively.

D. U.P. Branch (apart from the above) :

(9) Paid cash to W.B. – ₹ 20,000 and M.P. – ₹ 10,000 (RTP)

Journal entry in the books of Head Office

Working Note:

Inter Branch transactions

Question 19.
Show Adjustment journal Entry alongwith working notes in the books of head office at the end of April, 2017 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 ₹ 1,40,000 and ₹ 60,000 from Kolkata.
2. Sent goods to Chennai ₹ 1,00,000, Kolkata ₹ 80,000
3. Bill receivable received 80,000 from Chennai
4. Acceptances sent to Mumbai ₹ 1,00,000, Kolkata ₹ 40,000

(B) Mumbai Branch (Apart from the above):

1. Received goods from Kolkata 60,000, Delhi 80,000
2. Cash sent to Delhi 60,000, Kolkata 28,000

(C) Chennai Branch (Apart from the above):

1. Received goods from Kolkata ₹ 1,20,000
2. Acceptances and cash sent to Kolkata 80,000, Kolkata 40,000 respectively.

(D) Kolkata Branch (Apart from the above):

1. Sent goods to Chennai 1,40,000
2. Paid cash to Chennai 60,000
3. Acceptance sent to Chennai ₹ 60,000. (8 Marks) (May 2017)

Journal entry in the books of Head Office

Working Note:

Inter Branch transactions

Question 20.
Pass necessary Journal entries in the books of an independent Branch of M/s TPL Sons, wherever required, to rectify or adjust the following transactions:

1. Branch paid ₹ 5,000 as salary to a Head Office Manager, but the amount paid has been debited by the Branch to Salaries Account.
2. A remittance of ₹ 1,50,000 sent by the Branch has not received by Head Office on the date of reconciliation of Accounts.
3. Branch assets accounts retained at head office, depreciation charged for the year ₹ 15,000 not recorded by Branch.
4. Head Office expenses ₹ 75,000 allocated to the Branch, but not yet been recorded by the Branch.
5. Head Office collected ₹ 60,000 directly from a Branch Customer. The intimation of the fact has not been received by the Branch.
6. Goods dispatched by the Head office amounting to ₹ 50,000, but not received by the Branch till date of reconciliation.
7. Branch incurred advertisement expenses of ₹ 10,000 on behalf of other Branches, but not recorded in the books of Branch.
8. Head office made payment of ₹ 16,000 for purchase of goods by branch, but not recorded in branch books. (RTF)

Books of Branch
Journal Entries

Question 21.
Global Limited has a branch which closes its books of account every year on 31 st March. This is an independent branch which maintains comprehensive books of account for recording their transactions.
You are required to show journal entries in the books of branch on 31st March, 2011 to rectify or adjust the following:

1. Head Office allocates ₹ 1,35,000 to the branch as head office expenses, which have not yet been recorded by branch.
2. Depreciation of branch fixed assets, whose accounts are kept by head office in its books, not yet recorded in the branch books, ₹ 1,15,000.
3. Branch paid ₹ 1,40,000 as salary to an official from head office on visit to branch and debited the amount to its Salaries Account.
4. Head Office collected ₹ 1,30,000 directly from a branch customer on behalf of the branch, but no intimation was received earlier by the branch. Now the branch learns about it.
5. It is learnt that a remittance of ₹ 1,50,000 sent by the branch has not been received by head office till date. (5 Marks) (Nov 2011)

In the books of Branch
Journal Entries

Note: Cash-in-transit of ₹ 1,50,000 will be shown in the books of Head office.

Question 22.
Give Journal Entries in the books of Head Office to rectify or adjust the following:

1. Goods sent to Branch ₹ 12,000 stolen during transit. Branch manager refused to accept any liability.
2. Branch paid ₹ 15,000 as salary to the officer of Head Office on his visit to the branch.
3. On 28th March, 2012, the H.O. dispatched goods to the Branch invoiced at ₹ 25,000 which was not received by Branch till 31st March, 2012.
4. A remittance of ₹ 10,000 sent by the branch on 30th March, 2012, received by the Head Office on 1st April, 2012.
5. Head Office made payment of ₹ 25,000 for purchase of goods by Branch and wrongly debited its own purchase account. (5 Marks) (Nov 2012)

In the books of Head Office
Journal Entries

Note.In entry (i), it is assumed that refusal of branch manager (to accept liability of stolen goods) is accepted by the Head Office. Alternatively, Branch account will be credited on the basis of assumption that refusal of branch manager is not accepted by the Head Office.

Question 23.
Pass necessary Journal entries in the books of an independent Branch of a Company, wherever required, to rectify or adjust the following:

1. Income of ₹ 2,800 allocated to the Branch by Head Office but not recorded in the Branch books.
2. Provision for doubtful debts, whose accounts are kept by the Head Office, not provided earlier for ₹ 1,000.
3. Branch paid ₹ 3,000 as salary to a Head Office Manager, but the amount paid has been debited by the Branch to Salaries Account.
4. Branch incurred travelling expenses of ₹ 5,000 on behalf of other Branches, but not recorded in the books of Branch.
5. A remittance of ₹ 1,50,000 sent by the Branch has not received by Head Office on the date of reconciliation of Accounts.
6. Head Office allocates ₹ 75,000 to the Branch as Head Office expenses, which has not yet been recorded by the Branch.
7. Head Office collected ₹ 30,000 directly from a Branch Customer. The intimation of the fact has been received by the Branch only now.
8. Goods dispatched by the Head office amounting to ₹ 10,000, but not received by the Branch till date of reconciliation. The Goods have been received subsequently. (8 Marks) (May 2014)

Books of Branch
Journal Entries

Question 24.
On 31st December, 2012 the following balances appeared in the books of Chennai Branch of an English firm having its HO office in New York:

Stock on 31st December, 2012 was ₹ 6,37,500.
Branch account in New York books showed a debit balance of $13,400 on 31 st December, 2012 and Furniture appeared in the Head Office books at$ 1,750.
The rate of exchange on 31st December, 2011 was ₹ 52 and on 31st December, 2012 was ₹ 51. The average rate for the year was ₹ 50.
Prepare in the Head Office books the Profit and Loss a/c and the Balance Sheet of the Branch. (RTP)
In the books of English Firm (Head Office in New York) Chennai Branch
Profit and Loss Account for the year ended 31st December, 2012

Balance Sheet of Chennai Branch as on 31st December, 2012

Working Note:

Computation of Exchange Translation Loss Chennai Branch Trial Balance (converted in $) as on 31st December, 2012 Question 25. ABC Ltd. has head office at Delhi (India) and branch at New York (U.S.A). New York branch is an integral foreign operation of ABC Ltd. New York branch furnishes you with its trial balance as on 31st March, 2013 and the additional information given thereafter: The rates of exchange may be taken as follows: * on 1.4.2012 @ ₹ 40 per US$
* on 31.3.2013 @ ₹ 42 per US $* average exchange rate for the year @ ₹ 41 per US$.
New York branch account showed a debit balance of ₹ 22,190 on 31.3.2013 in Delhi books and there were no items pending reconciliation.
You are asked to prepare trial balance of New York branch in X in the books of ABC Ltd. (RTP)
In the books of ABC Ltd.
New York Branch Trial Balance in (₹) as on 31st March, 2013

Question 26.
M/s Heera & Co. has head office at U.S.A. and branch in Patna (India). Patna branch is an integral foreign operation of Heera & Co. Patna branch furnishes you with its trial balance as on 31st March, 2016 and the additional information given thereafter:

Information:

(a) Plant was acquired from a remittance of US $6,000 received from USA head office and paid to the suppliers. Depreciate Plant at 60% for the year. (b) Unsold stock of Patna branch was worth ₹ 4,20,000 on 31st March, 2016. (c) The rates of exchange may be taken as follows: • On 01.04.2015 @ ₹ 55 per US$
• On 31.03.2016 @ ₹ 60 per US $• Average exchange rate for the year @ ₹ 58 per US$
• Conversion in $shall be made up to two decimal accuracy. You are asked to prepare in US dollars the revenue statement for the year ended 31st March, 2016 and the balance sheet as on that date of Patna branch as would appear in the books of USA head office of Heera & Co. You are informed that Patna branch account showed a debit balance of US$ 29845.35 on 31.3.2016 in USA books and there were no items pending reconciliation. (RTP)
M/s Heera & Co.
Patna Branch Trial Balance in (US $) as on 31st March, 2016 Trading and Profit & Loss Account for the year ended 31st March, 2016 Balance Sheet of Patna Branch as on 31st March, 2016 Question 27. DM Ltd., Delhi has a branch in London. London branch is an integral foreign operation of DM Ltd. At the end of the year 31st March, 2009, the branch furnishes the following trial balance in U.K. Pound: In head office books, the branch account stood as shown below: London Branch A/c The following further information are given: (a) Fixed assets are to be depreciated @ 10% p.a on straight line basis. (b) On 31st March, 2009: Expenses outstanding – £ 400 Prepaid expenses – £ 200 Closing stock – £ 8,000 (c) Rate of Exchange: 1st April, 2005 – ₹ 70 to £ 1 1st April, 2008 – ₹ 76 to £ 1 31st March, 2009 – ₹ 77 to £ 1 Average – ₹ 75 to £ 1 (i) Trial balance, incorporating adjustments of outstanding and prepaid expenses, converting U.K. pound into Indian rupees. (ii) Trading and profit and loss account for the year ended 31st March, 2009 and the Balance Sheet as on that date of London branch as would appear in the books of Delhi head office of DM Ltd. (16 Marks) (Nov 2009) Answer: (i) Trial Balance of London Branch as on 31st March, 2009 Closing stock will be (£ 8,000 × ₹ 77) = ₹ 6,16,000 (ii) Trading and Profit & Loss Account for the year ended 31st March, 2009 (iii) Balance Sheet as on 31st March, 2008 Question 28. On 31 st March, 2010, the following ledger balances have been extracted from the books of Washington branch office: You are required to convert above Ledger balances into Indian Rupees. Use the following rates of exchange: (May 2010) Answer: Conversion of ledger balances (in Dollars) into Rupees Question 29. An Indian company Moon Star Limited has a branch at Virginia (USA). The Branch is a non-integral foreign operation of the Indian Company. The trial balance of the Branch as at 31st March, 2012 is as follows: The following further information’s are given: 1. Salaries outstanding$400.
2. Depreciate office equipment and Furniture & Fixtures @10% p.a. at written down value.
3. The Head Office sent goods to Branch for ₹ 15,80,000
4. The Head Office shown an amount of ₹ 20,50,000 due from Branch.
5. Stock on 31st March, 2013 -$21,500. 6. There were no transit items either at the start or at the end of the year. 7. On April 1,2010 when the fixed assets were purchased the rate of ex-change was ₹ 43 to one$ . On April 1, 2011, the rate was ₹ 47 per $. On March 31, 2012 the rate was ₹ 50 per$. Average Rate during the year was ₹ 45 to one $. Prepare: (a) Trial balance incorporating adjustments given converting dollars into rupees. (b) Trading, Profit and Loss Account for the year ended 31st March, 2012 and Balance Sheet as on date depicting the profitability and net position of the Branch as would appear in the books of Indian company for the purpose of incorporating in the main Balance Sheet. (16 Marks) (May 12) Answer: In the books of Moon Star Ltd. – an Indian Company Trial Balance (in Rupees) of Virginia (USA) Branch as on 31st March, 2012 (b) Trading and Profit and Loss Account of Virginia Branch for the year ended 31st March, 2012 Balance Sheet of Virginia Branch as on 31st March, 2012 Question 30. ABCD Ltd., Delhi has a branch in New York, USA, which is an integral foreign operation of the company. At the end of 31 st March, 2013, the following ledger balances have been extracted from the books of the Delhi office and the New York Branch: The following information is also available: 1. Stock as on 31-03-2013 Delhi – 2,00,000 New York –$ 10 (all stock received from Delhi)
2. Head Office always sent goods to the Branch at cost plus 25%.
3. Provision is to be made for doubtful debts at 5%.
4. Depreciation is to be provided on Buildings at 10% and on Plant and Machinery at 20% on written down values.

You are required:

(a) To convert the branch Trial Balance into rupees, using the following rates of exchange:
Exchange:
Open rate 1 $= ₹ 50 Closing rate 1$ = ₹ 55
Average rate 1 $= 52 For Fixed assets 1$ = ₹ 45

(b) To prepare the Trading and Profit & Loss Account for the year ended 31st March, 2013, showing to the extent possible, Head Office results and Branch results separately. (16 Marks) (May 2013)

ABCD Ltd.
(a) New York Branch Trial Balance as on 31st March 2013

(b) Trading and Profit & Loss Account for the year ended 31st March, 2013

Working Notes:

(1) Calculation of Depreciation

(2) Calculation of Additional Branch Stock Reserve

Question 31.
M/s ABC & Co. has head office at New York (U.S.A.) and branch in Bangalore (India). Bangalore branch is an integral foreign operation of ABC & Co.
Bangalore branch furnishes you with its trial balance as on 31st March, 2015 and the additional information given thereafter:

(a) Computers were acquired from a remittance of US $6,000 received from New York head office and paid to the suppliers. Depreciate computers at 60% for the year. (b) Unsold stock of Bangalore branch was worth ₹ 4,20,000 on 31 st March, 2015. (c) The rates of exchange may be taken as follows: • On 01.04.2014 @ ₹ 55 per US$
• On 31.03.2015 @ ₹ 60 per US $• Average exchange rate for the year @ ₹ 58 per US$
• Conversion in $shall be made up to two decimal accuracy. You are asked to prepare in US dollars the revenue statement for the year ended 31st March, 2015 and the balance sheet as on that date of Bangalore branch as would appear in the books of New York head office of ABC & Co. You are informed that Bangalore branch account showed a debit balance of US$ 29845.35 on 31.3.2015 in New York books and there were no items pending reconciliation. (5 marks) (May 2016)
M/s ABC & Co.
Bangalore Branch Trial Balance in (US $) as on 31st March, 2015 Trading and Profit & Loss Account for the year ended on 31st March, 2015 Balance Sheet of Bangalore Branch as on 31st March, 2015 Question 32. M & S Co. of Lucknow has a branch in Canberra, Australia. At the end of 31st March 2017, the following ledger balances have been extracted from the books of the Lucknow office and the Canberra. The following information is also available: 1. Stock as on 31st March, 2017 Lucknow ₹ 1,50,000 Canberra A$ 3125 (all stock are out of purchases made at Abroad)
2. Head Office always sent goods to the Branch at cost plus 25%
3. Provision is to be made for doubtful debts at 5%
4. Depreciation is to be provided on Buildings at 10% and on Plant and Machinery at 20% on written down value.

You are required to:
(1) Convert the Branch Trial Balance into rupees by using the following exchange rates:

(2) Prepare Trading and Profit and Loss Account for the year ended 31st March 2017 showing to the extent possible H.O. results and Branch results separately. (12 Marks) (Nov 2017)
M&S Co. Ltd.
Canberra, Australia Branch Trial Balance
As on 31st March 2017

Trading and Profit & Loss Account for the year ended 31st March, 2017

Working Note:

Calculation of Depreciation

Note:

1. In the above answer, it has been assumed that the Australia branch is an integral foreign operation of M & S Co.
2. As the closing stock of Branch does not consist any stock transferred from M& S Co., there is no need to create closing stock reserve. But the opening branch stock reserve has to be reversed in the P&L A/c.