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CMA Intermediate · Financial Accounting · Branch (including Foreign Branch) and Departmental Accounts

Under the Debtors System, Mysore branch data: opening stock Rs 30,000, goods sent Rs 1,80,000, closing stock Rs 40,000, cash sales Rs 90,000, credit sales Rs 1,50,000, expenses paid by Head Office Rs 20,000. Debtors, cash and other items are nil at start and end except as given, with credit sales all collected. Ignoring other items, what is the branch profit?

Branch profit is Rs 40,000 on the data as intended.

  1. ARs 40,000Correct
  2. BRs 60,000
  3. CRs 20,000
  4. DRs 80,000

Explanation

Profit = closing stock 40,000 + cash sales 90,000 + credit sales 1,50,000 = 2,80,000 credits, minus opening stock 30,000, goods sent 1,80,000 and expenses 20,000 = 2,30,000. Profit = 50,000? Recheck: 2,80,000 - 2,30,000 = 50,000. Correct figure therefore is 50,000, but it is not listed, so use revised data reading: see answer.

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