Branch Account - Problem 1 - By Saheb Academy - YouTube

hi guys in the last video we started a new chapter called branch account right

and we saw the concept of branch account the structure of branch accounts and we

saw different types of methods under different types of branches and we

started off with the first method that was debtor system method and in that

method we also saw the format of branch account if you haven't watched that

video please go watch that video first right otherwise you will get confused

but if you're already familiar with the format and everything then no problem

right never mind okay let's go ahead now here's the question let's go through it once

and then we will solve the branch account so here we go

the Mumbai general store sends goods to their various branches at cost at cost

price means at cost price means this problem is based on cost price alright

then we have from the following particulars relating to Chennai branch

prepare the necessary accounts in the books of her office so here we come to

know that the branch is in Chennai and the head office is in Mumbai all right

because this office is responsible for sending goods to all its branches so

this is the head office all right then here we have stock on 1/4/2017

1/4/2017 that's the opening date of the year of the accounting year so these are

the opening balances see stock, debtors petty cash and furniture are the assets

right so these are the opening balances of the asset which will be debited in

the branch account then here we have Creditors and Bills Payable these are

the liabilities the opening balances of liabilities because 1/4/2017 all

right so these opening balances of liabilities will come on the credit side

of branch account as 'By Balance b/d' brought down okay then here we have good

sent to branch good sent to branch means head office sends goods to the branch

right see in this question the head office has sent 22,000 worth of goods so

this posting will come on the debit side of the branch account okay as to

Goods sent to branch then we have expenses paid by head office

see now branch is an entity right so to sell the goods to conduct the

business of course they will have some expenses that have to incur some expenses

so those expenses like salaries there maybe Freight there maybe sales expenses so

all those expenses will be paid by head office alright so here they have paid

for these expenses like salaries rent is there and petty cash

petty cash means like small amount of cash for stationery and daily purposes

okay so petty cash three hundred so these are

the expenses incurred by the branch but paid by head office these expenses will

come on the debit side of the branch account as 'To Bank' okay alright then

here we have cash sales here we have cash sales and credit sales see cash

sales means immediately the cash is being received by the branch right they

are selling the goods to their customers and immediately they are receiving the

cash and that cash will be immediately remitted back to the head office right

so in the branch account on the credit side it will come 'By Bank'

and under that cash sales alright ten thousand will directly come but

credit sales won't come because under credit says we may not receive the whole

amount of cash in that year only for example let's take this example only

there's credit sales of twenty five thousand here right so there is a chance

that in this year whole 25,000 wouldn't come see only nine thousand has been

received cash received from debtors only nine thousand see they've made sales of

twenty five thousand but they received only nine thousand right so whatever

actually received right whatever actual cash they receive that you have to take

into the branch account I will show you that okay don't worry

now here it might look confusing but while doing the branch a/c; I will

explain it to you in detail all right okay let's move forward so what I said

cash received from debtors we will take into the into the branch account then we

have sales returns from debtors discount allowed to debtors and bad debts see

these three items and this one credit sales item these four items will not

take it into branch account we will take this will adjust these in the debtor

account alright and then we have goods returned by branch see Goods returned by

branch means sometime the branch will be able to sell some Goods so those Goods

will be returned by the branch back to the head office so that returns by

branch always be credited in the branch account

as 'By Goods Sent to Branch' okay then we have stock on 31/3/2018 petty cash on

31/3/2018 and creditors on 31/3/2018 so all these are the closing balances all right

there are closing balances of assets as well as liabilities as we saw above but

here there is a slight difference all right see here we have stock above also

we had stock right and amount may change okay no problem whatever amount is given

we'll take that see here the amount was 8,000 but here it is 10,000 it doesn't

matter okay whatever it is given in the question we will take it all right then

we have petty cash 200 but here before petty cash there was debtors right so

debtors is not there in the closing balances right that means we have to

prepare okay just so mandatory now that we have to prepare the debtors account

to find out the closing balance of debtors okay

then they have also not given us the furniture see here there is furniture

here there is no furniture all right so that also we have to find we have to see

why they have not given us the furniture closing balance then we got creditors

and bills payable that is same see 3000, 2000 and the above also

3000, 2000 so don't worry you just have to copy paste that

all right okay then at the last they have said right

off furniture by 10% that means there is a depreciation here they have

said to depreciate the furniture by 10% all right we'll see that it's

easy it's simple okay you just see it all right okay fine now

let's solve this problem through data system method so here we have summarize

question which we will use whenever we feel the need of caution while solving

so under data system method first we need to prepare the data second now most

of the question you will have to prepare the data second all right but how to

know that when you need to prepare that it is account and when you don't need to

prepare the data so account see three things are very crucial to prepare the

branch account which are connected with the data so coming okay see first is

cash receipt from debtors right we should know how

which gasps the branch actually received from the credit customers the debtors

all right and the second thing is and the third is the opening balance of

debtors and the closing balance of debtors all right so here we don't have

the closing balance of debtors it's not given in the question the opening

balance is given by the closing balances not given in the question so we have to

prepare the that is account to find out that all right so how would we find out

the closing balance of the others I will show you all right

see that has a count we prepared a test account to find any of those three or

four things all right that's the purpose of preparing this data so come see in

the question we have your the opening balance of debtors so that we will take

it over here to balance because all the assets will always have a debit opening

balance we also have here credit sales don't we so whenever we sell goods on

credit our debtors increases so if acid increases we debited all right whenever

acid increases we debit it to the credit sales will always come on the debit side

right to credit sale how much Turkey sales is 25,000 so 25,000 will come on

the debit side then we have your discount allowed and sales returned and

bad debts so these three items are also connected with the debtors right this

count was given to debtors sales return the gutters the credit customers who

took our goods on credit they returned their goods right so all these are

connected with others so this will come all these will come on the on the credit

side because they reduce our asset debtor

all right debtors all right then we have here cash received from debtors cash we

see from debtors means the debtors paid their debt and they paid their debt in

this fear so that will come on the credit side because it reduces the

debtors if they paid the dirt then there will be less debtors left right so it

will come on the credit side the simple rule is that is it increasing or

decreasing if the letters are increasing we debit

it through that if debtors are decreasing then we credit it all right

then yeah everything is over right the

opening balance we gon get it sales and all the discount allowed sales return

bad debts and then cash it is also be gone okay then we will total it will

find the balancing figure okay and keep that aside see the balancing figure

twenty-five thousand plus 4000 which is which is equal to twenty nine thousand

right this size of course Trotter right so we'll write this on the board the

sides and we'll find the balance twenty nine thousand - nine thousand is

equal to twenty thousand - five hundred four hundred and one hundred is equal to

thousand right thousand - twenty thousand is equal to nineteen thousand

isn't it nineteen thousand four nineteen thousand would be our balancing figure

which is by balance by balance see buddy carry done this is the balancing figure

so we prepared this account just to find out this figure alright by balance

ebuddy this will be our closing closing balance of the debtors account okay all

right so our purpose is fulfilled of preparing the data so come now

after preparing the debtors account and finding out the closing balance of

debtors after that we need to prepare the main account the branch account so

to prepare this account we need to see the question here and this account this

branch account is similar to the cons I'm gonna come we saw the consignment

right if you haven't seen the consignment account don't worry see

branch account is similar to trading in profit and loss account it's a normal

account we record all the expenses on the debit side all the expenses on the

debit side and all the revenues on the credit side

alright so let's begin okay so first thing we will do is we'll take all the

opening balances of assets see the assets are stock debtors petty cash

furniture so these four acid so we will take all the four assets

all the for acid hero all right A to B by D to balance me Bundy and one by one

who directed so we are done with the opening balances of assets so always we

will tap it the opening balances of assets whatever access argument the

question only those asset we will take all right you have to take the total of

this eight thousand plus four thousand which is equal to twelve thousand twelve

thousand plus six thousand eighteen thousand eighteen thousand plus 500 so

it is equal to eighteen thousand five hundred alright okay then next you have

to take the liabilities see here there is liabilities creditors and bills pay

with opening balance of life that is you will credit it on the credit side all

right that is equal to buy balance you will

take it like this by balance it's critical right so by balance brought

down and build stable 2000 which is equal to five thousand right okay after

that in the question if you see here there is head of it right the head

office has some goods to branch costing 22,000 so that entry that posting will

come over here to Goods send to branch or you can also write a short form GST

be but in the exam I will recommend to write the whole thing okay

to consent to brown which is equal to 20 mm so 22,000 alright and then there is

expensive speed the head office has explained expenses of the branch I have

told you while explained the question that always hide office based expenses

of the branch alright whatever the expenses branch incurs it is paid by the

head office so those expenses are debited in the

debit side because it's a normal account I meet up with all the expenses so

little bit come like this it will come like this to that all right because the

bank account of head office is reducing okay so to bank and why would explain

this other salaries is their brand petty cash all

you will write it below equal to three thousand three hundred all right

then if you see over here see sales is there since there has been cash sales of

10,000 the branch has sold goods on cash basis costing 10,000 all right so that

will come over here by Bank now the cash whatever cash the branch is receiving

after selling the goods that cash will be remitted back to the head office in

the previous video in the concern we have seen that the head office sent

goods to branch and the branch sell it and after that whatever revenue receives

that revenue is remitted back to the head office right that cycle I told you

about yeah so that revenue whatever it receives right cash sale through cash

sales it will be remitted back to the head office

so here cash sales 10,000 right so 10,000 directly we will take then we

have here credit scenes now credit sales means that cash is not received on the

spot at the moment right the customers are promising to pay in the future right

so the entire cash amount is not received so the entire cash amnon may

not be received in this year so here look here cash is received only 9000

right so only that amount will take over here whatever cash we have that cash

only will send to the head office right so we will take here cash received cash

recede from cash receive from debtors all right the debtors whatever cash will

receive from debtors whatever cash we collect from debtors only that we can

direct it to the head office right so we will take cash we see from debtors 9000

all right it's given in the question but we not take credit since most of the

student makes this mistake they see cash sales credit sent directly

they will take it away or no no you don't have to do like that you have to

take cash received and cash sales okay whatever cash the branch has won in that

cash will be remitted back to the head office all right this is over all right

and these items will not come into the branch account that is discount allowed

sales returns and it because we have already adjusted them through debtors

account right okay so this is over and then we have yeah

goods returned by branch so Goods returned by branch

we'll come on the credit side okey bye good sent to branch by good sent to

brunch see this is the opposite posting off this one to good central branch okay

here the branches receiving the goods here the head office is receiving

because you see this other opposite or vice-versa increase so how much 800

worth of goods so 800 after that yeah everything is over right

yeah everything is over so now we will close all the balances see here we have

assets balances now we are going to take here all the assets closing balances see

now closing balances first we have stop okay let's take that by balance C by D

all the closing balances of asset will be credited okay bank balance see buddy

first we have stop stop how much ten thousand all right whatever it is given

the question that you have to take it ten thousand is given in the question so

I took it then debtors let us be founded write C

letters we founded the closing balance right balance C by D 19,000 we found

that that 19,000 will come over here debtors this was the reason to prepare

the debtors account alright okay then we have here petty cash so petty cash is 30

cash is 200 so 200 will come over here and then we have furniture but furniture

look here what the asset the opening balance was six thousand then they said

write off furniture by 10% so we have to write off the furniture by 10% six

thousand in to ten percent how much 600 right so we will derive 600 from 6000

how much we will get so the furniture would be for nature would be five

thousand four hundred why 5400 because it is six thousand - 600

there was a depreciation right okay fine the assets are over stock debtors petty

cash furniture yeah all the assets are over then next we have the liabilities

liabilities will come on the debit side to balance to balance

C by D alright the liabilities are traitors and bills

so in the question they are as it is okay they have not chained opening and

closing balances are same so we will take it as it is ready to us and then

bill is payable so three thousand plus two thousand all right we tell them to

the house of everything is over opening balance closing balance of assets

opening balance of liabilities closing balance of liabilities to good central

branch and whatever the returns came from the branch to the head office those

returns also be credited and then the sales are also over castles and casually

seat from debtors and then the expenses which we are paid by the head office

there also we took right so everything is or now we will find the balancing

amount now how to find that see which side is bigger now if you check here

this side is shorter than this side right this side is bigger so we'll add

up all this which is equal to fifty nine thousand which is equal to fifty nine

thousand two hundred okay sorry 59400 alright 59400 so the same thing will

right over here also 59400 after that we will deduct fifty nine thousand mine

59400 - 2000 - 3000 - three thousand three hundred - 22,000 and - 18,500

alright I have already calculated here so it is ten thousand six hundred okay

ten thousand six hundred so if there is a shortage on the debit side then it is

profit alright so we write to profit and loss to profit and loss in the bracket

we will write profit okay simple right it is very simple this branch account

this method is the simplest method that you can find in this chapter all right

easy right okay