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

Kaveri Textiles, Pune, runs a dependent branch at Nashik under the debtors system. Branch records for the year show: opening debtors ₹40,000; credit sales ₹2,10,000; cash received from debtors ₹1,80,000; discount allowed ₹4,000; sales returns ₹6,000. What is the closing balance of branch debtors?

Closing branch debtors are ₹60,000. Opening debtors and credit sales are added. Cash received, discount allowed and sales returns all reduce the amount still due from customers, so 40,000 + 2,10,000 − 1,80,000 − 4,000 − 6,000 gives 60,000.

  1. A₹60,000Correct
  2. B₹64,000
  3. C₹66,000
  4. D₹72,000

Explanation

Closing debtors = opening 40,000 + credit sales 2,10,000 − cash 1,80,000 − discount 4,000 − returns 6,000 = ₹60,000. If the discount is ignored the figure is ₹64,000. If returns are ignored it is ₹66,000. If returns are added instead of deducted it is ₹72,000.

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