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

Kolkata Ltd's dependent branch at Patna sold goods for Rs 4,00,000 on credit, of which Rs 3,20,000 was collected in cash, and Rs 20,000 of goods were returned by customers. Opening debtors were Rs 50,000 and discount allowed to customers was Rs 5,000. What is the closing balance of branch debtors under the debtors system?

Closing branch debtors are Rs 1,05,000. Opening debtors of Rs 50,000 plus credit sales of Rs 4,00,000 give Rs 4,50,000. Cash collected of Rs 3,20,000, returns of Rs 20,000 and discount of Rs 5,000 total Rs 3,45,000 and are deducted to reach the closing balance.

  1. ARs 1,05,000Correct
  2. BRs 1,00,000
  3. CRs 1,10,000
  4. DRs 95,000

Explanation

Debtors account: opening 50,000 + credit sales 4,00,000 = 4,50,000. Deduct cash received 3,20,000, returns 20,000 and discount 5,000 = 3,45,000. Closing = 4,50,000 - 3,45,000 = Rs 1,05,000. Rs 1,10,000 results from ignoring the discount.

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