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Zorluk: OrtaAccounting for Dependent Branches at Cost Price

Enugu Head Office operates a dependent branch in Aba, supplying all goods at cost price. For the year ended 31 December 2025, the following details were extracted from the books:

TransactionAmount (₦)
Stock at branch (1 January 2025)15,000
Goods sent to branch120,000
Goods returned to head office5,000
Cash sales85,000
Credit sales40,000
Branch operating expenses12,000
Stock at branch (31 December 2025)18,000

What is the net profit earned by the Aba branch for the year ended 31 December 2025?

Cevap: 1000 ₦

Cevap

The net profit earned by the Aba branch for the year ended 31 December 2025 is ₦1,000.
Total revenue is ₦125,000 (cash sales ₦85,000 + credit sales ₦40,000). Cost of goods sold is ₦112,000 (opening stock ₦15,000 + net goods sent ₦115,000 - closing stock ₦18,000). Gross profit is ₦13,000 (₦125,000 - ₦112,000). Subtracting branch expenses of ₦12,000 gives a net profit of ₦1,000.

Adım Adım Çözüm

1
Calculate Total Turnover (Sales) generated by the branch
Total Sales = ₦85,000 + ₦40,000 = ₦125,000
Branch sales comprise both cash sales remitted and credit sales made during the accounting year.
2
Calculate Net Goods Sent to Branch
Net Goods Sent = ₦120,000 - ₦5,000 = ₦115,000
Goods returned by the branch to Head Office reduce the total cost of inventory supplied to the branch.
3
Determine Cost of Goods Sold (COGS)
COGS = Opening Stock (₦15,000) + Net Goods Sent (₦115,000) - Closing Stock (₦18,000) = ₦112,000
COGS is calculated by adding net purchases/deliveries to opening stock and deducting closing stock.
4
Compute Gross Profit and Net Profit
Gross Profit = ₦125,000 - ₦112,000 = ₦13,000; Net Profit = ₦13,000 - ₦12,000 = ₦1,000
Deducting cost of sales from turnover yields gross profit, and subtracting branch expenses yields net profit.

Anahtar Kavram

Branch Trading and Profit Calculation at Cost Price
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Konular

Accounting for Dependent Branches at Cost Price

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