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CA Intermediate · Advanced Accounting · Accounting for Branches including Foreign Branches

Head office maintains the Jaipur branch accounts under the debtors system. Branch debtors were ₹30,000 at the start of the year. During the year: credit sales ₹2,40,000; cash received from debtors ₹2,10,000; discount allowed ₹4,000; bad debts written off ₹2,000; goods returned by customers ₹6,000. What is the closing balance of branch debtors?

Closing branch debtors are ₹48,000. Starting with opening debtors of ₹30,000 and adding credit sales of ₹2,40,000, the reductions are cash received ₹2,10,000, discount ₹4,000, bad debts ₹2,000 and sales returns ₹6,000. The balancing figure in the branch debtors account is ₹48,000.

  1. A₹48,000Correct
  2. B₹50,000
  3. C₹52,000
  4. D₹60,000

Explanation

Closing debtors = 30,000 + 2,40,000 − 2,10,000 − 4,000 − 2,000 − 6,000 = 48,000. Omitting bad debts gives 50,000. Omitting discount gives 52,000. Adding customer returns instead of deducting them gives 60,000, which is the wrong direction.

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