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(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. The statement does not

make part of the double-entry system; it simply shows the financial performance
of a branch.
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Example 5.4
Satellite Ltd is a retailing company whose headquarter is in Dar es salaam and a
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branch in Tanga. The company policy requires goods to be transferred to the branch
at cost. The branch sells goods to customers consistently at cost plus a 30 per cent
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mark-up.
The following information relates to the branch operations for August 2024.

Particulars TZS
Opening balances:
Inventory 7,200,000

Accounts receivable 2,000,000
Cash sales remitted to the head office 28,284,000

Cash received from debtors and remitted to the head office 7,696,000
Goods invoiced to the branch 28,800,000

Rent 1,200,000
Salaries 1,800,000

Closing balances:
Inventory 6,400,000
Accounts receivable 2,500,000

Solution 5.4
Based on information in example 10.4 above, the records in the books of accounts at the
head office would be as follows under the debtor and inventory method:

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