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

The head office of Vardhan & Co. maintains the Branch Debtors Account for its Surat branch. Opening debtors were ₹40,000. During the year, cash received from debtors was ₹2,10,000, discount allowed ₹4,000, sales returns ₹6,000, and bad debts written off ₹3,000. Closing debtors are ₹50,000. What were the credit sales for the year?

Credit sales were ₹2,33,000. In the branch debtors account, the credit side totals ₹2,73,000 (cash, discount, returns, bad debts and closing balance). Deducting the opening debtors of ₹40,000 from this total gives the credit sales needed to balance the account.

  1. A₹2,07,000
  2. B₹2,30,000
  3. C₹2,73,000
  4. D₹2,33,000Correct

Explanation

In the Branch Debtors Account, credits are cash 2,10,000, discount 4,000, returns 6,000, bad debts 3,000 and closing balance 50,000, totalling ₹2,73,000. The debit side is opening 40,000 plus credit sales. So credit sales = 2,73,000 − 40,000 = ₹2,33,000. Omitting bad debts gives ₹2,30,000.

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