Star Stores has its head office and main store in Crewe, and a branch store in Leek. All goods are purchased by the head office. Goods are invoiced to the branch at cost price plus a profit loading of 20 per cent. The following trial balances have been extracted from the books of account of both the head office and the branch as at 31 December 19X9:

Required: ,

(a) Prepare in adjacent columns and using the vertical format: (i) the head office, and (ii) the branch trading and profit and loss accounts for the year to 31 December 19X9 (note: a combined profit and loss account is NOT required); and

(b) prepare in the vertical format, Star Stores’ balance sheet as at 31 December 19X9 (note:
separate balance sheets for the head office and the branch are NOT required)

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Head Office Branch Dr Cr Dr 000 000 000 Cr 000 Administrative expenses 380 30 Distribution costs 157 172 Capital (at 1 January 19X9) 550 Cash and bank 25 2 Creditors and accruals 176 20 Current accounts 255 180 Debtors and prepayments 130 76 76 Motor vehicles: at cost 470 230 accumulated depreciation at 31 December 19X9 280 120 Plant and equipment: at cost 250 80 accumulated depreciation at 31 December 19X9 120 30 30 Proprietor's drawings during the year 64 Provision for unrealised profit on branch stocks at 1 January 19X9 5 Purchases 880 Sales 1,200 570 Stocks at cost/invoiced amount at 1 January 19X9 Transfer of goods to the branch/ 80 30 from the head office 360 300 2,691 2,691 920 920