ABC Limited, a manufacturing business, exports some of its products through an overseas branch whose currency is “Florin
Posted: Sun Apr 10, 2022 8:31 am
ABC Limited, a manufacturing business, exports some of its
products through an overseas branch whose currency is “Florins”
which carries out the final assembly operation before selling the
goods. The Trial Balance of the Head Office and the branch on June
30, 2012 were as under: Head of Account Home Office Branch Office
Dr. (Tk.) Cr. (Tk.) Dr. (FL) Cr. (FL) Freehold building at cost
14,000 63,000 Debtors/Creditors 8,900 9,500 46,000 11,560 Sales
1,04,000 4,32,000 Issued share capital 140,000 Components sent to
branch 35,000 Head Office/Branch 60,100 5,04,260 Branch-Cost of
Sales 3,60,000 Provision for depre. on machinery 1,500 56,700 HO
cost of sales (including goods sent to branch) 59,000
Administrative cost 15,200 18,000 Stock on 30th June 2012 28,900
11,520 Profit & Loss Account 2,000 Machinery at cost 6,000
1,26,000 Remittances 28,000 2,72,000 Cash at bank 104,600 79,200
Selling and distribution cost 23,300 28,800 Total 3,20,000 3,20,000
104,520 104,520 Following adjustments are to be made: (1) The cost
of sales figure includes a depreciation charge of 10% per annum on
the cost of machinery. (2) A Provision of Tk. 300 for unrealized
profits in the branch stock is to be made. (3) On 26th June, 2012
the branch remitted 16,000 “FL” this amount was received by the H.O
on 14th July, 2012 and realised Tk. 1,900. (4) During May 2012, a
customer of the branch by mistake paid the H.O for goods supplied
by the branch. The amount due from him was FL 320 which realised
Tk. 36. It has been correctly dealt with by H.O but not yet entered
in the Branch Accounts. (5) Provide commission at 5 percent of the
net profits of the branch after charging such commission which is
payable to the Branch Manager. (6) The exchange rates were; (a) At
1st July, 2011: 10 FL = 1 Taka; (b) At 30th June, 2012: 8FL = 1
Taka: (c) Average rate for the year; 9 FL = 1 Taka; and (d) On date
of purchase of building and machinery: 7 FL = 1 Taka. Required: You
are required to prepare for internal use: (i) Branch Trail Balance
(after above adjustments) in H.O currency. (ii) Detailed Trading
and Profit and Loss Accounts of H.O and the branch for the ending
30th June, 2012. (iii) Balance Sheet as at 30th June, 2012
(Combined) figures of the H.O and the branch). Ignore taxation.
products through an overseas branch whose currency is “Florins”
which carries out the final assembly operation before selling the
goods. The Trial Balance of the Head Office and the branch on June
30, 2012 were as under: Head of Account Home Office Branch Office
Dr. (Tk.) Cr. (Tk.) Dr. (FL) Cr. (FL) Freehold building at cost
14,000 63,000 Debtors/Creditors 8,900 9,500 46,000 11,560 Sales
1,04,000 4,32,000 Issued share capital 140,000 Components sent to
branch 35,000 Head Office/Branch 60,100 5,04,260 Branch-Cost of
Sales 3,60,000 Provision for depre. on machinery 1,500 56,700 HO
cost of sales (including goods sent to branch) 59,000
Administrative cost 15,200 18,000 Stock on 30th June 2012 28,900
11,520 Profit & Loss Account 2,000 Machinery at cost 6,000
1,26,000 Remittances 28,000 2,72,000 Cash at bank 104,600 79,200
Selling and distribution cost 23,300 28,800 Total 3,20,000 3,20,000
104,520 104,520 Following adjustments are to be made: (1) The cost
of sales figure includes a depreciation charge of 10% per annum on
the cost of machinery. (2) A Provision of Tk. 300 for unrealized
profits in the branch stock is to be made. (3) On 26th June, 2012
the branch remitted 16,000 “FL” this amount was received by the H.O
on 14th July, 2012 and realised Tk. 1,900. (4) During May 2012, a
customer of the branch by mistake paid the H.O for goods supplied
by the branch. The amount due from him was FL 320 which realised
Tk. 36. It has been correctly dealt with by H.O but not yet entered
in the Branch Accounts. (5) Provide commission at 5 percent of the
net profits of the branch after charging such commission which is
payable to the Branch Manager. (6) The exchange rates were; (a) At
1st July, 2011: 10 FL = 1 Taka; (b) At 30th June, 2012: 8FL = 1
Taka: (c) Average rate for the year; 9 FL = 1 Taka; and (d) On date
of purchase of building and machinery: 7 FL = 1 Taka. Required: You
are required to prepare for internal use: (i) Branch Trail Balance
(after above adjustments) in H.O currency. (ii) Detailed Trading
and Profit and Loss Accounts of H.O and the branch for the ending
30th June, 2012. (iii) Balance Sheet as at 30th June, 2012
(Combined) figures of the H.O and the branch). Ignore taxation.