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A raipur head office has a branch in Indore . All goods are supplied to branch by head office at cost price. Brach makes only cash sales. The following are the particulars for 2015-16 Opening Stock - 50,000 Goods supplied to branch- 5,00,000 Cash sales- 6,00,000 Expenses-25,000 Branch sells goods at cost plus 25% , closing stock could not be ascertained . Branch manager gets 10% commission on profit after charging commission. Prepare Indore Branch .?
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A raipur head office has a branch in Indore . All goods are supplied t...
Indore Branch Account for 2015-16

Opening Stock - Rs. 50,000
Goods supplied by head office - Rs. 5,00,000
Total cost of goods available for sale - Rs. 5,50,000
Cash sales - Rs. 6,00,000
Expenses - Rs. 25,000

Calculation of Cost of Goods Sold (COGS)
COGS = Opening Stock + Goods supplied by head office - Closing Stock
As the closing stock is not given, it cannot be ascertained.

Calculation of Gross Profit
Gross Profit = Sales - COGS
= Rs. 6,00,000 - COGS

Calculation of Markup
Markup = (Gross Profit / COGS) x 100
= ((Rs. 6,00,000 - COGS) / COGS) x 100
= (Rs. 6,00,000 / COGS) x 100 - 100

Markup is given as 25%, therefore,
25% = (Rs. 6,00,000 / COGS) x 100 - 100
COGS = Rs. 4,80,000

Calculation of Gross Profit
Gross Profit = Rs. 6,00,000 - Rs. 4,80,000
= Rs. 1,20,000

Calculation of Commission to Branch Manager
Commission to Branch Manager = 10% of (Gross Profit - Commission)
= 10% of (Rs. 1,20,000 - 10% of Rs. 1,20,000)
= 10% of Rs. 1,08,000
= Rs. 10,800

Preparation of Indore Branch Account
Indore Branch Account
Particulars Amount (Rs.)
To Head Office (Goods supplied) 5,00,000
To Expenses 25,000
To Commission to Branch Manager 10,800
To Closing Stock ?
Total ?

By Sales 6,00,000
By Gross Profit 1,20,000
By Balance c/d ?

Total ?

As the value of closing stock is not given, it cannot be ascertained. The balance c/d will be the difference between the total debits and total credits.
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A raipur head office has a branch in Indore . All goods are supplied t...
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A raipur head office has a branch in Indore . All goods are supplied to branch by head office at cost price. Brach makes only cash sales. The following are the particulars for 2015-16 Opening Stock - 50,000 Goods supplied to branch- 5,00,000 Cash sales- 6,00,000 Expenses-25,000 Branch sells goods at cost plus 25% , closing stock could not be ascertained . Branch manager gets 10% commission on profit after charging commission. Prepare Indore Branch .?
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