EG Company Limited, a manufacturing business, exports some of its products through an overseas branch whose currency is ‘florins’, which carries out the final assembly operations before selling the goods. 

The trial balances of the head office and branch at 30 June 2018 were:

The following adjustments are to be made:
1 The cost of sales figures include a depreciation charge of 10% per annum on cost for machinery.
2 A provision of £300 for unrealised profit in branch inventory is to be made.
3 On 26 June 2018 the branch remitted 16,000 Fl.; these were received by the head office on 4 July and realised £1,990.
4 During May a branch customer in error paid the head office for goods supplied. The amount due was 320 Fl. which realised £36. It has been correctly dealt with by head office but not yet entered in the branch books.
5 A provision has to be made for a commission of 5% of the net profit of the branch after charging such commission, which is due to the branch manager. The rates of exchange were:

You are required to prepare, for internal use:
(a) Detailed operating accounts for the year ended 30 June 2018; Author’s note
(b) Combined head office and branch statement of financial position as at 30 June 2018;
(c) The branch account in the head office books, in both sterling and currency, the opening balance on 1 July 2017 being £25,136 (189,260 Fl.).

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Freehold buildings at cost Accounts receivable and accounts payable Sales Authorised and issued capital Components sent to branch Head office/branch accounts Branch cost of sales Depreciation provision, machinery Head office cost of sales (including goods to branch) Administration costs Inventory at 30 June 2018 Retained profits Machinery at cost Remittances Balance at bank Selling and distribution costs Head Office £ 14,000 8,900 60,100 59,000 15,200 28,900 6,000 4,600 23,300 220,000 £ 9,500 104,000 40,000 35,000 1,500 2,000 28,000 Branch Fl. 63,000 36,000 360,000 18,000 11,520 126,000 272,000 79,200 28,800 220,000 994,520 Fl. 1,560 432,000 504,260 56,700 994,520