Page 148 - Accountancy_F5

(iv) Branch statement of profit or loss;
(v) Goods sent to branch account; and
(vi) Branch adjustment account.

A branch will be required to maintain branch assets account and branch cash account in
addition to those kept at the head office, especially when the branch has permission to
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buy inventory and incur expenses. However, when the columnar approach is adopted,

there is no need of preparing a branch adjustment account.
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Example 5.3
Kasa Ltd is a retailing entity whose headquarter is in Dar es salaam and a branch in
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Morogoro. The company policy is to sell its goods to customers at a 25 per cent profit
margin and the same price is used to transfer goods to the branch.
The following information relates to the branch operations for June 2024.

Particulars TZS
Opening balances:
- Inventory 9,000,000

- Accounts receivable 2,000,000
Cash sales remitted to the head office 23,000,000

Cash received from debtors and remitted to the head office 14,500,000
Goods invoiced to the branch 36,000,000
Closing balances:

- Inventory 8,000,000

- Accounts receivable 1,500,000
Required:
Show the necessary ledger accounts in the Kasa Ltd., under the inventory and debtor’s
method.

Solution 5.3
From the information provided, the books of accounts showing the transactions of the
branch would be as follows under the inventory and debtors (integrated) method:

Student’s Book Form Five
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