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

Under the debtors system, the Pune branch of Kaveri Enterprises shows these figures: opening debtors ₹40,000; closing debtors ₹50,000; cash received from debtors ₹3,10,000; discount allowed ₹5,000; sales returns ₹15,000; bad debts written off ₹3,000. All credit sales are made through debtors. What is the credit sales of the branch for the year?

Credit sales are ₹3,43,000. The Branch Debtors Account credit side totals ₹3,83,000 (cash, discount, returns, bad debts and closing debtors). After deducting opening debtors of ₹40,000, the balancing debit entry is credit sales of ₹3,43,000.

  1. A₹3,43,000Correct
  2. B₹3,23,000
  3. C₹3,13,000
  4. D₹3,63,000

Explanation

In the Branch Debtors Account, credits are cash, discount, returns, bad debts and closing balance: 3,10,000+5,000+15,000+3,000+50,000 = 3,83,000. The debit side has opening debtors ₹40,000, so credit sales = 3,83,000 − 40,000 = ₹3,43,000. Omitting bad debts or returns would give a lower figure.

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