Springs Limited was incorporated on June 15, 2010, with its headquarters in Awka, Nigeria. The Company has a branch in Obosi, a town located in South-East Nigeria. The Head office of Springs Ltd. maintains branch financial accounting records.
The following information was extracted from Springs Ltd. Springs Ltd operates from both its headquarters and branch. ₦
Opening balances (1 April 2015):
Branch inventory (at cost to head office) 12,000
Branch accounts receivables 3,600
Branch bank 2,200
Head office bank 2,400
Closing balance (30 April 2015):
Branch inventory (at cost to head office) 10,000
During the month of April 2015 the subsequent
transactions occurred in the branch:
Inventory sent to branch (at cost to Head office) 22,000
Inventory returned by the branch to the head office
(At cost to the head office) 1,200
Receipts from sales paid into bank 7,700
Credit sales 20,000
Cash transferred from branch bank to head office
bank account 20,500
Discount allowed to customers 100
Inventory returned to branch by customers 500
Cheque received from customers 19,000
Bad debts written off 50
Rent 700
Cooling 150
Lighting 300
Transport 100
Fuel 350
Salaries 200
Wages 120
General expenses 40
Assume that the head office transfers inventory to the branch at cost price.
Required: Prepare the relevant accounts in the records of the head office.
See the suggested answer to practice activity 18.2 here.
Suggested answer to practice activity 18.2
Records of the Head office
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