Get premium membership and access questions with answers, video lessons as well as revision papers.

In the context of non-autonomous branches, describe the accounting treatment in the books of the head office of the following items. (i) Goods stolen in transit (ii)...

      

In the context of non-autonomous branches, describe the accounting treatment in the books of the head office of the following items.
(i) Goods stolen in transit
(ii) Mark-ups and mark-downs in prices.

  

Answers


Wilfred
i. Goods stolen on transit is an abnormal loss of stock and therefore the cost of the goods should be charged to the profit and loss-account of the branch maintained at the head office. The profit loading on these goods should be debited to the branch
adjustment account with selling price of the goods stolen being credited to the branch stock account.

ii. Where the head office increases the selling prices at the branch, the amount of the mark-up should be debited to the branch stocks account with a corresponding credit entry to the-branch mark-up account. However, if it reduces the selling prices to
boost sales at the branch level, the amount of mark-down in prices should be charged to the branch mark-up with a credit entry to the branch stock account.
Wilfykil answered the question on February 11, 2019 at 10:21


Next: Determine: (a) Profit and loss account for the year ended 31 October 2002. (b) Balance sheet as at 31 October 2002.
Previous: In the context of International Accounting Standard (IAS) 21, The Effects of Changes in Foreign Exchange Rates: i) Define monetary items. ii) Explain how foreign currency monetary...

View More CPA Financial Reporting Questions and Answers | Return to Questions Index


Learn High School English on YouTube

Related Questions