Question

7. Ologun Trading Enterprises supplies goods to its Enugu branch. Transactions in December 2019: (i) goods costing D24,000 invoiced to the branch at cost plus 33⅓%; (ii) branch returns showed sales of D20,000; (iii) goods invoiced at D320 were returned to head office; (iv) closing stock at the branch was D11,520 at selling price. You are required to prepare in the head office books: (a) Goods Sent to Branch Account; (b) Branch Stock Account; (c) Branch Adjustment Account.

Accepted Answer

(a) Goods Sent to Branch Account: Returns D320 and Branch Trading A/c (balancing transfer) D7,680, total D24,000, against Stock (goods sent at invoice price) D24,000.
(b) Branch Stock Account: Bal b/d D2,840 + Goods sent to branch D24,000 = D31,840, less Returns D320, Sales D20,000, leaving Bal c/d D11,520.
(c) Branch Adjustment Account: Goods sent to branch (loading) D7,680 transferred to Profit and Loss Account as branch gross profit.

WAEC Accounting 2021 Theory — Question 7

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