Page 157 - Accountancy_F5

accounting treatment is the same as if the goods are returned by the branch, but through
branch debtors. Therefore, the goods sent account is debited and the branch debtors
account is credited. However, branches will also need to update their records regarding
branch debtors.
Exercise 5.1
FOR ONLINE READING ONLY
Kasa Ltd is a retailing company whose headquarter is in Dar es salaam and a branch
in Morogoro. The company policy is to sell its products to customers at a 15 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 5,000,000
Accounts receivable 2,000,000

Cash sales remitted to the head office 30,600,000

Cash received from debtors and remitted to the head office 16,200,000
Goods invoiced to the branch 43,000,000
Goods returned to the head office 6,000,000
Rent 2,000,000
Salaries LANGUAGE EDITING 4,000,000
Closing balances:
Inventory 6,000,000
Accounts receivable 3,500,000
Required:
(a) Use debtors’ method to prepare a branch account, then determine the branch profit.
(b) Prepare books of accounts in head office to record branch transactions using an
integrated approach under the inventory and debtor’s method.

Autonomous branches/independent branches
Autonomous branches are those branches that are big and the nature of their operations
is complex to the extent of requiring them to manage their operations. Obviously, when
a branch becomes big it becomes difficult to manage it from the head office. In this case,
the branch should prepare and maintain its books of accounts. However, for branches
to prepare their financial reports, they must have sufficient resources to allow them to
employ their own accounting staff. An example of a company with independent branches
is the Tanzania Breweries Co. Ltd whose head office is in Dar Es Salaam and its branches
are in Arusha, Mwanza, and Mbeya.

Student’s Book Form Five
144

23/06/2024 17:35
ACCOUNTANCY_DUMMY_23 JUNE.indd 144 23/06/2024 17:35
ACCOUNTANCY_DUMMY_23 JUNE.indd 144