QUESTION 4

Which of the following alternatives represents the correct amount that must be recorded as credit sales in the branch inventory account ?

A. 57 600 (Cr)

B. 57 600 (Dr)

C. 71 600 (Cr)

D. 71 600 (Dr)

QUESTION 5

Which one of the following alternatives is correct?

A. Where inventory to the branch is invoiced at cost price, the settlement discount granted to branch debtors must be recorded on the debit side of the branch inventory account.

B. Where inventory to the branch is invoiced at cost price, the gross profit of the branch must be recorded on the debit side of the branch adjustment account.

C. Where inventory to the branch is invoiced at selling price, petty cash stolen at the branch must be recorded on the credit side of the branch inventory account

D. Where inventory to the branch is invoiced at cost price, a mark down of inventory below the cost price must be recorded on the credit side of the branch inventory account.

The following information pertains to the head office and the branch of Kgaphamadi Traders: 1. Branch inventory on hand (selling price): 1 January 2020 31 December 2020. 5 200 5 000 2. Transactions during the year ended 31 December 2020: R Inventory sent to branch (selling price). 156 200 Sales by the branch: Cash sales... 71 600 Credit sales. 57 600 Returns to head office (cost price)... 7 400 Cash received from branch debtors... 11 200 Settlement discount granted to branch debtors. 1 000 Inventory stolen at the branch (selling price).. 7 500 Sundry expenses of the branch paid by head office... 18 500 3.1 All inventories are purchased by the head office and supplied to the branch at selling price, which is cost price plus 25% Additional information: 3.2 Due to the continuing job losses in the area, there has been a significant decline in sales at the branch in Hlogotlou. As a result, the head office has allowed the Hlogotlou branch to sell certain products at selling price less 30%. The net proceeds of the products sold at discount amounted to R8 400. This amount is included in the above cash sales figure of R71 600. 3.3. During the year a burglary took place at the Hlogotlou branch and R1 400 in cash (in respect of cash sales) was stolen. No entries regarding the burglary were made in the books