Mamat Sdn Bhd, which operates in Dungun, has a branch Kerteh. Dungun sends goods to Kerteh at
Question:
Mamat Sdn Bhd, which operates in Dungun, has a branch Kerteh. Dungun sends goods to Kerteh at cost plus 10%. The Mersing branch is allowed to make its own local purchases and maintain its own accounting records.
The following is the list of ledger balances as of 31 December 2014.
| Dungun | Kerteh | ||
| RM | RM | RM | RM |
| Dr | Cr | Dr | Cr |
Capital |
| 300,000 |
|
|
Sales |
| 74,310 |
| 40,825 |
Purchase | 45,250 |
| 8,400 |
|
Goods sent to Branch |
| 16,000 |
|
|
Goods from head office |
|
| 11,200 |
|
Debtors | 25,500 |
| 9,430 |
|
Creditors |
| 17,540 |
| 7,060 |
Land and Building at cost | 155,000 |
|
|
|
Motor Vehicle at cost | 65,000 |
| 36,150 |
|
Branch current account | 35,000 |
| - |
|
Head office current account |
| - |
| 29,400 |
Opening Stock | 14,480 |
| 6,500 |
|
Selling and distribution expenses | 9,575 |
| 405 |
|
Administrative expenses | 24,950 |
| 1,800 |
|
Finance expenses | 6,420 |
| 1400 |
|
Cash at Bank | 27,875 |
| 2,000 |
|
Provision for unrealized profit |
| 1,200 |
|
|
| 409,050 | 409,050 | 77,285 | 77,285 |
Additional information:
1. Goods invoiced at RM 4,800 are in transit and RM 800 cash remittance was yet to be received on 31 December 2014.
2. Stock at 31 December 2014:
| RM |
Head Office | 12,500 |
Branch | From Dungun: 6,600 |
3. Depreciation as at 31 December 2014 are as follows:
| Dungun | Kerteh |
Land and Building | 3,800 | - |
Motor Vehicle | 2,500 | 1,515 |
4. A branch administrative expense of RM 680 was paid by head office. This was not recorded in either book.
Required:
A. Statement of Comprehensive Income for the Head office, the Branch, and the combined entities for the year ended 31 December 2014. B. Branch current account.
C. Combined Balance Sheet as of 31 December 2014
D. Why the balance of the branch current account and head office current account have different amounts.
Cornerstones of Financial and Managerial Accounting
ISBN: 978-1111879044
2nd edition
Authors: Rich, Jeff Jones, Dan Heitger, Maryanne Mowen, Don Hansen