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In the Books of .........…………Ltd
Dr Branch account Cr
Amount Amount (currency)
Date Particulars (currency) Particulars
At At At sell- At selling
FOR ONLINE READING ONLY
selling cost ing price price (except
price unsold
inventory)
LANGUAGE EDITING
Balance b/d: Cash remittance to
LANGUAGE EDITING
• Inventory xx xx head office:
• Accounts receivable xx xx • Cash sales xx xx
• Petty cash xx xx • Debtors’ sales xx xx
• Long term asset xx xx • Goods returned xx xx
• Prepaid expenses xx xx to head office
xxx xxx xxx xxx
(c) Statement of profit or loss (final accounts) method
In this method, separate statements of profit or loss are prepared for each branch
to reflect their trading activities and other operations. In preparation of the branch
statements of profit or loss, the cost of the goods transferred to the branch at sell-
ing price is converted into cost price. The statements of profit or loss does not
make part of the double-entry system, it simply shows the financial performance
of a branch.
Goods sent to a branch at cost price
Under this approach, the goods sent to the branch are charged at the cost. The approach
can be used either under the debtors’ method, inventory and debtor’s method, or in-
come statement (final accounts) method.
(a) Debtors’ method
Under debtor’s method only one account namely branch account is used to re-
cord business transactions between the head office and the branch. When goods
are transferred at cost, the debit side of the branch account is recorded with
the opening balance of the inventory, debtors’ opening balance, and the petty
cash. It is also debited with the cost of goods sent to the branch, expenses of the
Student’s Book Form Five
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