Paper Products has a head office in London and a branch in Bristol. The following information has

Question:

Paper Products has a head office in London and a branch in Bristol. The following information has been extracted from the head office books of account as at 31 March 2016:

Additional information:
1 Most of the accounting records relating to the branch are kept by the head office in its own books of account.
2 All purchases are made by the head office, and goods are invoiced to the branch at selling price, that is, at cost price plus 50%.


Required:
(a) Write up the following ledger accounts for the year to 31 March 2016, being careful to bring down any balances as at that date:
(i) Branch inventory account;
(ii) Goods sent to branch account;
(iii) Branch inventory adjustment account;
(iv) Branch accounts receivable account; and
(v) Branch bank account.
(b) Compile Paper Products’ statement of profit or loss for the year ending 31 March 2016. Author’s note
(c) Examine briefly the merits and demerits of Paper Products’ method of branch bookkeeping including comments on the significance of the ‘balancing figure’ in the branch inventory account.

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