Nion is a retail stock outlet operating from a head office in London and a branch in Brighton.

The following trial balances have been extracted from the books of account as at 31 October 2011.

Additional information:
1 All goods are purchased by the head office. Those goods sent to the branch are invoiced at cost plus 25 per cent.
2 Stocks were valued at 31 October 2011 as being at head office, £12,000; and at the branch, £15,000 at their invoiced price.
3 Depreciation is to be provided for the year on the fixed assets at a rate of 10 per cent on the historic cost.
4 The provision for doubtful debts is to be maintained at a rate of 5 per cent ne outstanding trade debtors as at the end of the financial year.
5 As at 31 October 2011, there was £50,000 cash in transit from the branch to the head office;
this cash was received in London on 3 November 2011. There was also £5,000 of goods in transit at invoice price from the head office to the branch; the branch received these goods on 10 November 2011.

Required:

Prepare in adjacent columns:

(a) the head office, and (6) the branch trading and profit and loss accounts for the year ending 31 October 2011; and a combined balance sheet for Nion as at that date.
Notes:
(i) a combined trading and profit and loss account is NOT required; and (ii) separate balance sheets for the head office and the branch are also NOT required.

Transcribed Image Text:

Head Office Books Branch Books Dr Cr Dr Cr Drawings 40,000 Fixed assets: at cost 350,000 100,000 accumulated depreciation (at 1 November 2010) 140,000 30,000 Stock (at 1 November 2010) 8,000 20,000 Provision for unrealised profit 4,000 Purchases 914,000 Goods sent to branch at invoiced value 380,000 375,000 Sales 850,000 437,000 Provision for doubtful debts 9,000 2,500 Head office/branch current accounts 175,000 120,000 Distribution expenses 80,500 5,000 Administrative expenses 200,000 16,500 Trade debtors 60,000 60,000 Trade creditors 50,000 Cash and bank balances 15,500 13,000 Capital 410,000 1,843,000 1,843,000 589,500 589,500