DEBTORS SYSTEM

Q 1. Calculate the invoice price of the goods sent to branch and the profit margin included therein:
(i) Goods amounting to Rs. 2,00,000 at cost are sent to the branch at cost plus 20%.
(ii) Goods costing Rs. 1,50,000 are invoiced to branch at 30% above cost.
(iii) Goods costing Rs. 2,50,000 are sent to branch at 120% of the cost price to head office.
(iv) Goods costing Rs. 4,20,000 are invoiced to branch to give gross margin of 40% on sale.
(v) Goods sent to branch (at cost to branch) Rs. 3,60,000. Goods have been invoiced at 20% above the cost.
(vi) Goods received from head office Rs. 1,20,000. Goods-in-transit Rs. 20,000. Goods are invoiced at cost plus 40%.

Q2. Company X has a branch at Delhi. Goods are invoiced from Head Office to branch at cost plus 33.33%. Find out the profit at
the branch according to Debtors System.
Opening Balances: Debtors-Rs. 10,000; Petty Cash- Rs.1,000; Furniture- Rs.2,000; Stock (I.P.)- Rs.8,000.
Cash sent by Head Office for petty expenses- Rs.2,000;
Branch expenses and losses: Freight and Advertisement- Rs.5,600; Bad debts- Rs.50; Depreciation- Rs.80; Petty Expenses-
Rs.1,500
Cash Sales- Rs.50,000; Credit Sales- Rs.36,000; Goods returned by debtors- Rs.800; Goods returned by branch to head office-
Rs.2,000; Cash received from debtors- Rs.20,000; Stock at the end at I.P.- Rs.7,800; Goods invoiced by Head Office during the
year- Rs.88,000

STOCK AND DEBTORS SYSTEM

Q3. XYZ has a retail branch at Delhi. Goods sent by H.O. to branch marked at selling price which is cost plus 25%. All expenses
of branch are paid by H.O. All cash collected by branch is credited to H.O. From the following, prepare: Branch stock A/c, branch
adjustment A/c, branch debtors A/c and branch expense A/c.
Debtors as on 1.1.2014 12,000
Debtors as son 31.12.2014 14,000
Stock as on 1.1.2014 16,000
Stock as on 31.12.2014 17,000
Cash sales during the year 60,000
Amount deposited in H.O. A/c 1,27,000
Returned goods to H.O. 5,000
Salaries paid 6,000
Rent paid 4,000
Discount allowed to customer 2,000
Bad debts W/O 1,000
Spoilage 2,000

Q4. Delhi head office supplies goods to its branch at Mumbai at Invoice Price which is cost plus 50%. All cash received by branch
is remitted to Delhi and all branch expenses are paid by H.O. From the following information, prepare Branch stock A/c, branch
adjustment A/c, branch debtors A/c and branch expense A/c.
Stock with branch as on 1.1.2015 66,000
Branch Debtors as on 1.1.2015 22,000
Petty cash balance as on 1.1.2015 500
Goods received from H.O.(at invoice price) 2,04,000
Goods returned to H.O. 6,000
Credit Sales-87,000,sales return-3,000,cash sales-1,06,000
Allowances to customers on S.P.(already adjusted while invoicing) 2,000
Cash received from debtors 93,000
Discount allowed to debtors 2,400
Expenses(cash paid by H.O.): rent-2,400, salaries-24,000, petty cash-2,000
Stock with branch as on 31.12.2015 69,000
Petty cash balance as on 31.12.2015 100
Q5. IBM Ltd. has two branches-one at Jaipur and another at Lucknow. Goods are invoiced to branches at cost plus 50%. Branches
remit all cash received to H.O. and all expenses are met by the H.O. from the following particulars, prepare necessary accounts
under stock and debtors system.
Stock with branch as on 1.1.2015 9,300
Branch Debtors as on 1.1.2015 6,800
Goods received from H.O.(at cost price) 34,000
Sales at branch: cash-25,010; credit- 31,000
Cash collected from debtors 30,400
Goods returned to H.O. 1,200
Goods transferred from Lucknow branch to Jaipur Branch 1,500
Shortage of stock 2,100
Shortage of stock at branch 450
Discount allowed to customers 200
Expenses at branch 5,400

STOCK AND DEBTORS SYSTEM

Q6. ABC Ltd. has a retail branch at Gurgoan. Goods sent by H.O. to branch marked at selling price which is cost plus 20%. All
expenses of branch are paid by H.O. All cash collected by branch is credited to H.O. All sales made by branch is on credit basis.
From the following, Prepare: Branch stock A/c, branch adjustment A/c, branch debtors A/c and branch expense A/c.
Debtors as on 1.1.2014 25,750
Debtors as son 31.12.2014 10,000
Stock (on I.P.) as on 1.1.2014 36,000
Stock (on I.P.) as on 31.12.2014 48,180
Goods Sent to Branch at I.P. 3,24,600
Discount allowed to Debtors 5,750
Amount received from debtors 3,10,000
Returned goods to H.O. 6,420
Brach expenses paid by H.O. 30,000

Q7. Delhi head office supplies goods to its branch at Mumbai at Invoice Price which is cost plus 50%. All cash received by branch
is remitted to Delhi and all branch expenses are paid by H.O. From the following information, prepare Branch stock A/c, branch
adjustment A/c, branch debtors A/c and branch expense A/c.
Stock with branch as on 1.1.2015 60,000
Branch Debtors as on 1.1.2015 12,000
Petty cash balance as on 1.1.2015 100
Goods received from H.O.(at invoice price) 1,86,000
Goods returned to H.O. 13,000
Credit Sales less return 86,000
Cash received from Debtors 90,000
Discount allowed to Debtors 2,400
Expenses(cash paid by H.O.)
Rent 2,400
Petty Cash 24,000
Cash Sales 1,000 27,400
Cash sales 1,04,000
Stock with branch as on 31.12.2015 54,000
Petty cash balance as on 31.12.2015 1,000

Final Account System

Q8. Shreaanka Ltd. with its office in Kolkata has a branch at Delhi. You are given the following particulars relating to Delhi
Branch for the year needed 30th June 2019:
Opening Stock-Rs. 15,700; Goods sent to Branch during the year- Rs.45,600; Total sales at branch (including Rs.19,700 for cash
sales)- Rs.73,300; cash received from debtors- Rs.52,200; Opening Debtors- Rs.16,900; Opening balance of petty cash- Rs.110;
Goods returned by the branch- Rs.3,900;
Cash sent to branch for expenses: Salary- Rs.12,800; Petty cash- Rs.2,600; rent- Rs.3,000
Closing Stock- Rs.18,800; Closing petty cash- Rs.90.
Prepare a branch trading and profit loss account and Delhi branch account in the books of Head Office.
Q9. A Delhi merchant has a branch at Chennai to which he charges the goods at cost plus 25%. The Chennai Branch keeps it own
sales ledger and transmits all cash received to the head office every day. All expenses are paid from the Head Office. The
transactions for the branch were as follows:
Opening Stock - Rs.20,000; Opening Debtors- Rs.200; Opening petty cash- Rs. 200; Cash sales- Rs.5,200; goods sent to branch-
Rs.35,000; collection from ledger accounts- Rs.38,000; goods returned to head office- Rs.500; bad debts- Rs.400; allowances to
customer- Rs.350; return inwards- Rs.750; cheques sent to branch for rent- Rs.1,000; for wages and salaries- Rs.2,000; Closing
stock- Rs.25,000; closing debtors- Rs.3,500; petty cash (including miscellaneous income Rs.50 not remitted on the closing date)-
Rs.150.
Prepare the branch trading and P&L account for the year ending 31 st December 2018, and also branch account in the books of head
office.
QUESTION BASED ON INTER BRANCH TRANSACTIONS

Q10. Give journal entries for the following transactions in the books of Head Office.
1. Cash remitted by Delhi Branch Rs.300 not received by H.O. till 31 December.
2. Goods sent by H.O. on 28 December amounting to Rs.500 to its Bombay Branch not received by the branch till 31
December.
3. Expenses paid by H.O. on 28th December for its Delhi Branch Rs.1,000 and for Bombay Branch Rs.1,100 not yet adjusted
in the accounts.
4. Goods sent by Delhi Branch to Bombay Branch Rs.1,000 are yet to be recorded.
5. Delhi branch collected Rs.500 from a customer of H.O.
6. Bombay Branch paid Rs.3,000 for a machine purchased by H.O. for the use in H.O. itself.
7. H.O. expenses are to be allocated to Delhi and Bombay Branches- Rs.3,000 and Rs.2,000.
8. Provide depreciation at 10% on furniture when the furniture accounts are maintained by H.O.
Furniture at Delhi Branch- Rs.25,000; Furniture at Bombay Branch- Rs.15,000.
9. For the current year Delhi Branch showed a net loss of Rs.2,500 and Bombay branch a net profit of Rs.10,000.

Q11. Aman Radios having its H.O. in Delhi with branches at Lucknow and Allahabad closes its annual accounts on 31 st December,
when the following transactions have taken place:
(a) Remittances of Rs.4,500 made by Lucknow branch to its H.O. on 30 th December received by H.O. on 5 January.
(b) Goods valuing Rs.2,200 dispatched by Allahabad branch on 27 th December under instructions from the H.O. and received
by Lucknow branch on 30th December.
(c) Depreciation amouting to Rs.1,100 on Lucknow branch fixed assets when accounts of such assets are maintained at the
H.O.
(d) Goods worth Rs.9,000 dispatched by the H.O. on 30 th December received by the Allahabad branch on 7 th January.

Q12. Bright Eletronics Ltd., Chennai has branches at Calcutta, Patna, Guwahati and Cuttack for speedy disposal of goods. These
branches are allowed transactions interse under advice to H.O. Following are the inter- branch transactions for the month of
January 2015.

Calcutta Branch
1. Sent goods to Patna Rs.2,000, Guwahati Rs.5,000 and Cuttack Rs.9,000.
2. Drawn bills on Patna Rs.1,000, Guwahati Rs.3,000 and Cuttack Rs.4,000.
3. Received goods from Patna Rs.7,000, Guwahati Rs.6,000 and Cuttack Rs.15,000.
4. Bill accepted of Patna Rs.7,000. Guwahati Rs.3,000 and Cuttack Rs.6,000.

Patna Branch( In addition to transactions as aforesaid)

1. Sent goods to Guwahati Rs.15,000 and Cuttack Rs.9,000.
2. Drawn bills on Guwahati Rs.10,000 and Cuttack Rs.5,000.
3. Received goods from Guwahati Rs.6,000 and Cuttack Rs. 8,000.
4. Accepted bill drawn by Guwahati Rs.3,000 and Cuttack Rs.4,000.

Guwahati Branch( In addition to transactions as aforesaid)

1. Sent goods to Cuttack Rs.6,000.
2. Drawn bills on Cuttack Rs.4,000.
3. Received goods from Cuttack Rs.8,000.
4. Accepted/drawn bills by Cuttack Rs.9,000.