At times, the head office predominantly the manufacturing firm sells articles
to actual consumers through its retail outlets. In this case, the head office sends articles to the
branches at wholesale rates that is, cost plus a percentage of profit
Lean: From Theory to Practice — One City’s (and Library’s) Lean Story… Abridged
Wholesale and retail profit at branch branch accounting
1. At
times, the head office predominantly the
manufacturing firm sells articles to actual consumers
through its retail outlets. In this case, the head office
sends articles to the branches at wholesale rates that
is, cost plus a percentage of profit.
Continue Reading
2.
The branch is prone to sell those articles at retail rates
which are higher than the wholesale prices. The actual
profit gained by the branch is the difference between the
wholesale rate and the retail rate.
For instance, the cost price of a good is $ 50, the
wholesale price is $ 80 and the retail price is $ 90. If the
good is sold by the branch, the original price is $ 90 - $
50 = $ 40. However, the actual profit of the branch is $
90 - $ 80 = $10.
Continue Reading
3.
The system is adhered when a branch is considered as
a profit centre. The actual cost of the branch is the
wholesale price of the articles sent.
However, it must be remembered that wholesale prices
are predetermined above cost.
Hence if all the articles have been sent to branch are
sold, there is no concern. The actual concern arises
when a part of the goods
Continue Reading
4.
remains unsold which integrates an element of
profit made by the head office.
To compute the real profit earned, the value of
unsold stock lying in the branch are to be
deducted from wholesale price to cost prices.
The below given journal entry is passed at the
end of the year.
Continue Reading
5. Profit and Loss A/c (head office)(wholesale price costprice)
To Stock Reserve A/c
In the balance sheet, branch stock is represented after
reducing stock reserve. At the
start of the subsequent year, a reverse entry is passed,
i.e.
Stock Reserve A/c
To Profit and Loss A/c
(head office)
Continue Reading
6. Important Points To Be Noted By
Students:
1. Opening stock if any has to be debited in the Branch
Trading Account at the
wholesale price or the invoice price.
2. The articles sent to branch (that is net value) at
invoice price or wholesale price is also
given a debit in the Branch Trading Account.
3. The retail price of the articles sold is credited in the
Branch Trading Account.
Continue Reading
7.
4.The closing stock at branch at either invoice
price or wholesale price is given a credit in the
Branch Trading
Account.http://www.tutorsonnet.com/financehomework-help.php
5. The Head Office Trading Account has to be
debited by opening stock (if available, at cost
price) articles purchased etc. and will be credited
by direct sales (usually at
Continue Reading
8.
invoice price or wholesale price) and article sent to
branch (net value) at wholesale or invoice price.
The closing stock (at cost price) of head office is
also given a credit to Head Office Trading Account.
Continue Reading
9.
If there is any closing stock remains at branch, a
Stock Reserve Account has to be opened by
giving debit to Profit and Loss Account (head
office) and giving credit to Stock Reserve Account.
The value of stock reserve is the discrepancy
between wholesale price (invoice price) and cost
price of head office..
Continue Reading
10.
7. If there is any opening stock remains at
branch, Stock Reserve Account is given debit and
head office profit and loss is given credit with the
(wholesale price of opening minus cost price of
such articles) loading
Continue Reading
11. List of Subjects which we Provide Homework
Help:
1 Accounting 9 C 17 JavaScript
2 Finance 10 Visual Basic 18 Shell Scripting
3 Statistics 11 C# (C Sharp) 19 Math
4 Economics 12 Matlab Programming 20 Chemistry
5 Operations 13 Database 21 Physics
6 Marketing 14 ER Diagrams 22 Dissertations
7 Java 15 Oracle 23 Case Study
8 C++ 16 Microsoft (MS) Access 24 Project
Management
Continue Reading
12. For More Details:
Website: http://www.tutorsonnet.com
Mail Us: sendquestions@tutorsonnet.com
Phone: +91 98803 85500