FINANCIAL ACCOUNTING 3

Statement of Financial Position Combined as at 31 December 2016

HQ BRANCH COMBINED

RM RM RM RM RM RM

NON CURRENT 90,000 30,000 120,000

ASSET

CURRENT 66,000 22,836 86,760 W4
ASSETS 9,504 8,640 W5
Inventory 52,000 23,000
Good in transit 15,000 75,000
Debtors 126,004 5,596 15,000
Cash in transit 50,832 131,600
Bank 51,432
Branch current 81,432 317,000
437,000
319,340
409,340

CURRENT 55,000 30,600 85,600
LIABILITIES 2,940 W6
Creditors 50,832
provision for 57,940 81,432
unrealized profit
HQ Current 229,200 - 229,200
27,636 - 27,636
Financed by 54,564 - 54,564
Capital 40,000 40,000
Retained profit
Net profit
Share premium

351,400 351,400
409,340 437,000

BRANCH CURRENT ACCOUNT

Balance b/d RM Good in transit RM
profit & loss 71,500 cash in transit 9,504
3,836 balance c/d 15,000
50,832
75,336
75,336

98

WORKING NOTES

W1 RM RM
Opening stock 85,000
Head office stock at cost 23,200
Branch stock at invoice price 2,000 21,200
Less) unrealized profit 106,200

W2 22,836 66,000
Closing stock 2,076
Head office stock at cost 20,760
Branch stock at invoice price 86,760
Less) unrealized profit
(RM22,836 x 10/110) 9,504
combined stock at cost
864
Stock in transit 8,640
Goods in transit to the branch 95,400

at invoiced price 2,076
864
Less: unrealized profit
(RM9504 x 10/110) 2,940
2,000
W2 RM86,760 + RM8,640
940
W3
Provision for unrealized 86,760
profit
Unrealized profit for closing stock 8,640
Unrealized profit for stock in transit
total provision required
less : provision b/d

W4
Combine stock at cost

W5
Stock in transit

99

QUESTIONS

Part A : Problem Solving Question

1.1

Dugong Enterprise, the head office at Kuala Lumpur has delivered the goods at the cost price
to the branch, Helmy Enterprise in Pontian. Below are the transaction regarding to the branch
business :

First day of the period – RM
Stock
Debtors 1,000
During the period - 500
Goods sent to branch
Return goods to head office 9,000
Cash sales by branch 500
Credit sales by branch 6,500
Branch general expenses paid by head office 10,000
Travelling expenses paid by branch 500
Received payment from debtors 1,000
Discount allowed to debtors 5,500
At the close of the last day of the period – 110
Stock
Stolen goods 1,500
200

You are required to prepare ledgers for branch transaction in Head Office’s book

100

1.2

MisNina Sdn Bhd, the head office at Kuala Lumpur has delivered the goods at the cost price
to the branch in Seremban. Below are the transaction regarding to the branch transaction for
the year ended 30 April 2016.

May 1, 2015 RM
– Stock
Debtors 2,000
During the period - 500
Goods sent to branch
Return goods to head office 15,000
Cash sales by branch (cash transfer to head office) 500
Credit sales by branch 5,500
Return goods from customers 20,000
Travelling expenses paid by branch 100
Received payment from debtors 1,000
Discount allowed to debtors 15,680
30 April 2016 320
– Stock
Broken goods 1,000
300

You are required to prepare ledgers for branch transaction in MisNina Sdn Bhd’s book.

101

1.3

Lalaland Ltd, the head office in Kelantan has delivered the goods at the mark-up price 20% to
the branch in Johor. Below are the transaction regarding to the branch transaction for the year
ended 31 December 2017.

As at 1 January 2017 RM
Stock at the branch (selling price)
Branch bank balance 94,000
Branch debtors 22,000
10,000

Transactions during the year 290,000
Goods sent to the branch (cost price) 20,000
Goods returned from the branch at cost 384,500
Sales 35,000
Branch expenses

You are required to prepare
a) branch stock account
b) branch stock adjustment
c) good sent to branch
d) branch debtors

102

Part B : Question

Question 1

All goods were purchased by head office and goods sent to the branch were invoiced at 20%
on cost. The following was the trial balance as on 31 December 2017

Motor vehicle Head Office Books Branch Books
Furniture DR (RM) CR(RM) DR (RM) CR(RM)
Provision for depreciation : motor
vehicle 80,000 14,000
Furniture 14,000
Stock –1 January 2017
Purchases 12,000
Good sent to branch
Sales 2,800 1,000
Branch and head office current
accounts 4,000 20,000 19,040 35,160
Salaries & wages 45,000 75,000 13,040
Debtors 3,000
Creditors 14,000 4,000 49,200
Bank 9,160
Capital 6,000 10,000 49,200
8,000
65,200
14,000 185,000

185,000

Additional information :

i. Stock on 31 December 2017, amounted to :
Head Office RM14,000, Branch RM3,600

ii. Depreciation rate for motor vehicles and furniture were 25% and 20% on cost
respectively.

iii. On 31 December 2017, the goods invoiced at RM960, in transit from head office
to the branch, no recorded in the branch books.

You are required to prepare

a) Statement of comprehensive Income for a Head Office, branch and combined for the
year ended 31 December 2017

b) Branch Current Account
c) Statement of financial position for the Head Office, branch and combined of Head

Office and Branch as at 31 December 2017.

103

Question 2

Oasis Berhad has a branch operating at Kampar. The trial balance for head office, Oasis
Berhad and branch as at 31 December 2017 are as follows:

Particulars Head Office Branch
(RM) (RM)
Debit
Cash 30,000 10,000
Inventory 1 January 2017 60,000 15,000
Branch current account 110,000
Fixed assets 290,000 -
Purchases 310,000 131,000
Goods received form head office
Operation expenses - -
110,000 90,000
Credit 910,000 41,000
Payable accounts 287,000
Unrealized profit 37,000
Ordinary shares capital ( RM 10, nominal value) 3,000 30,000
Retained earnings 250,000 -
Head office current account 120,000 -
Goods sent to branch -
Sales -
100,000 97,000
400,000 -

160,000

910,000 287,000

Additional information:-

i. Branch received all the inventories from head office

ii. Inventories as at 31 December 2017 are as follows:.

Head office (cost) RM 40,000

Branch (selling price) RM 10,000

iii. There is cash in transit had yet to be recorded by head office amounted RM 3,000

iv. Goods sent to branch at selling price 125% from the cost

v. During the year 2017, head office had spent RM 4,000 for advertising expenses.

Head office has yet to be recorded and settled the expenses.

You are required to prepare:

a) Statement of comprehensive Income for a Head Office, branch and combined for the
year ended 31 December 2017

b) branch Current Account
c) Statement of financial position for the Head Office, branch and combined of Head

Office and Branch as at 31 December 2017.

104

Question 3

The following are trial balance of Nur Mini Market and its branch as at 31 December 2017.

Head office Branch
Dr Cr Dr Cr
RM RM RM RM

Share capital 1,200,000 70,000 50,000
Profit & loss account 60,000 444,000 460,000
Administration expenses 10,000
Distribution expenses 860,000
Cash 388,000 452,000
Creditors 60,000
Debtors 190,000
Current accounts 402,000 220,000
Furniture (net) 424,000
Motor vehicle (net) 610,000 1,646,000
Provision for unrealized profit 260,000
Purchases 380,000 70,000
Sales
Stock at 1 January 2017 20,000 700,000
2,760,000 2,156,000
HQ at cost
Branch at invoice price 3,500,000
Goods sent to branch
Goods received from HQ 260,000

820,000 2,156,000

6,002,000 6,002,000

Additional information:
i. All goods sold by the branch are supplied from HQ at cost plus mark –up of

20%.

ii. As at 31 December 2017, the goods of RM120,000 were transit to the branch

and had not been received by branch until 3 January 2018.

iii. On 30 December 2016, the branch had remitted RM30,000 to the head office

but still not received by HQ until 3 January 2018.

iv. Stocks as at 31 December 2017, excluding the goods in transit, were valued as

follows: HQ (at cost) RM200,000

Branch (at mark-up) RM58,000

You are required to prepare:

a) Statement of comprehensive Income for a Head Office, branch and combined for the
year ended 31 December 2017

b) branch Current Account
c) Statement of financial position for the Head Office, branch and combined of Head

Office and Branch as at 31 December 2017.

105

References

Companies Act 2016.
Frank Wood, A. S. (2012). Business Accounting 2. Pearson Publication Limited.
Lazar, J., & Leng, T. L. (2011). Company and Group Financial Reporting. Pearson.
MASB. (2011). In Malaysian Financial Reporting Standards . Malaysian Accounting Standards Board

2011.
Maung, K. (2000). LCCI Book-Keeping and Accounts 2. SRC Publications and Distributor.
Wan Madznah, W., Bijoy, K., & Khairul Naziya, K. (2008). Fundamentals of Business Accounting.

Oxford University Press.

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