Hire Purchase and Inland Branches Key Points

Hire Purchase and Inland Branches Solution: Memorandum Branch Trading and Profit & Lass Account for the year ending 31.12.2018

• Debit side includes Opening Stock $\text{Rs. }8,800$, Goods sent to Branch $\text{Rs. }16,000$, Wages $\text{Rs. }200$, and Gross Profit c/d $\text{Rs. }11,740$.
• Credit side includes Sales (Cash $\text{Rs. }2,650$ and Credit $\text{Rs. }23,950$ less Returns $\text{Rs. }500$), Goods sent to HO $\text{Rs. }240$, and Closing Stock $\text{Rs. }10,400$.
• Total debit and credit are equal at $\text{Rs. }36,740$.

Profit and Loss Account

• Debit side lists Bad Debts $\text{Rs. }300$, Allowances $\text{Rs. }250$, Rent $\text{Rs. }600$, Salaries and other expenses $\text{Rs. }900$, and Profit transferred to General Profit & Loss A/c $\text{Rs. }9,715$.
• Credit side includes Gross Profit b/d $\text{Rs. }11,740$ and Misc. Income $\text{Rs. }25$.
• Total debit and credit are equal at $\text{Rs. }11,765$.

Madras Branch Account

• Debit side lists Balance b/d (Stock $\text{Rs. }8,800$, Debtors $\text{Rs. }21,000$, Petty Cash $\text{Rs. }100$), Goods sent to Branch A/c $\text{Rs. }16,000$, Bank A/c (Rent $\text{Rs. }600$, Wages $\text{Rs. }200$, Salaries and other expenses $\text{Rs. }900$), and Profit as per Branch Trading and P & L A/c $\text{Rs. }9,715$.
• Credit side includes Bank A/c (Cash Received from Debtors $\text{Rs. }100$, Cash Sales $\text{Rs. }2,650$), Goods Sent to Branch returns to H.O. $\text{Rs. }240$, and Balance c/d (Stock $\text{Rs. }10,400$, Debtors $\text{Rs. }2,000$, Petty Cash $\text{Rs. }125$).
• Total debit and credit are equal at $\text{Rs. }36,415$.