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ILLUSTRATION 5. From the following information, prepared- (a) Reconciliation of Head Office Account in Branch Books and of the Branch Account in the Head Office
ILLUSTRATION 5. From the following information, prepared- (a) Reconciliation of Head Office Account in Branch Books and of the Branch Account in the Head Office Books; and (b) The Trading and Profit & Loss Account of the Head office-for the year ended 31st December, 2014. Branch $ 4,500 Opening Stock Purchases Sales Other Expenses Closing Stock Head Office $ 10,000 1,15,000 2,05,000 15,200 5,200 1,55,000 6,200 3,100 The Branch books show Account at $9,000 (Cr.) and the Head Office books show the Branch Account at $24,000 (Dr.) The Branch receives all its supplies from the Head Office, which are invoiced at 25% over cost. During the year, the Head Office sent invoices to the Branch to the tune of $1,04,500. The Head Office credits its Sales Account with the invoice price of the goods sent to the Branch, The Head Office billed the Branch for $12,000 on 31st December, 2014 representing the Branch's share of the expenses incurred by the Head Office. The said expenses had not been recorded in the books of the Branch. The expenses of the Branch are met by the Head Office from time to time for which amounts are sent in advance to the Branch. A sum of $3,000 sent to the Branch by the Head Office on 29th December, 2014 in this connection, was received by the Branch on 3rd January, 2015
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