Examkin

Departmental and Branch Accounts

82 soru

Tüm türler82Çoktan seçmeli39Doğru / Yanlış1Sayısal24Eşleştirme18
Soru 81Soru →

A Head Office in Lagos supplies goods to its Port Harcourt branch at an invoice price that includes a mark-up of 3313%33\frac{1}{3}\% on cost. At the end of the accounting period, the physical inventory count at the branch shows closing stock valued at ₦24,000\text{₦}24,000 at invoice price. What is the value of the stock reserve in Naira required to eliminate the unrealized profit from the closing stock?

Cevabı ve açıklamayı göster

Cevap: 6000

Cevap

The stock reserve required to reduce the closing inventory to cost price is ₦6,000.
To determine the stock reserve on closing stock priced at invoice price, convert the mark-up on cost (33 1/3% or 1/3) to profit margin on selling price, which is 1/4 (25%). Multiplying 25% by the closing inventory value of ₦24,000 gives ₦6,000.

Adım Adım Çözüm

1
Convert mark-up on cost to profit margin on selling/invoice price
Profit margin on invoice price = 25% (or 1/4)
Margin = Mark-up / (100% + Mark-up) = (1/3) / (4/3) = 1/4
2
Calculate unrealized profit (stock reserve) on closing inventory
Stock reserve = ₦6,000
Stock reserve = 1/4 of ₦24,000 = ₦6,000

Anahtar Kavram

Calculation of Branch Stock Reserve on Closing Inventory at Invoice Price
Soru 82Soru →

On 31st December 2025, the Kano Branch Current Account in the Head Office ledger of Zenith Commercial Ventures showed a debit balance of ₦250,000\text{₦}250,000. On the same date, the Head Office Current Account in the Kano Branch ledger showed a credit balance of ₦195,000\text{₦}195,000.

Upon reconciliation, the following timing differences were discovered:
1. Goods worth ₦35,000\text{₦}35,000 dispatched by the Head Office to Kano Branch on 28th December 2025 were not received by the branch until 4th January 2026.
2. Cash remittance of ₦20,000\text{₦}20,000 sent by Kano Branch to the Head Office on 30th December 2025 was received by the Head Office on 5th January 2026.

What is the true reconciled balance of the inter-entity current account as at 31st December 2025?

Cevabı ve açıklamayı göster

Cevap: 230000

Cevap

The true reconciled inter-entity current account balance as at 31st December 2025 is ₦230,000\text{₦}230,000.
To calculate the true reconciled balance, adjust both books for unrecorded timing differences. The Head Office ledger shows a debit balance of ₦250,000\text{₦}250,000; crediting this account for cash in transit of ₦20,000\text{₦}20,000 yields ₦230,000\text{₦}230,000. Simultaneously, the Branch ledger shows a credit balance of ₦195,000\text{₦}195,000; crediting this account for goods in transit of ₦35,000\text{₦}35,000 yields ₦230,000\text{₦}230,000. Both sets of books reconcile to ₦230,000\text{₦}230,000.

Adım Adım Çözüm

1
Identify the unadjusted ledger balances in both books
Head Office ledger (Branch Current Account): Debit balance of ₦250,000\text{₦}250,000. Branch ledger (Head Office Current Account): Credit balance of ₦195,000\text{₦}195,000.
Before reconciliation, timing differences cause discrepancies between inter-entity balances.
2
Adjust the Head Office books for Cash in Transit
Deduct Cash in Transit (₦20,000\text{₦}20,000) from the Branch Current Account debit balance: ₦250,000−₦20,000=₦230,000\text{₦}250,000 - \text{₦}20,000 = \text{₦}230,000 debit.
The Head Office has not yet credited the Branch Current Account for cash remitted by the branch.
3
Adjust the Branch books for Goods in Transit
Add Goods in Transit (₦35,000\text{₦}35,000) to the Head Office Current Account credit balance: ₦195,000+₦35,000=₦230,000\text{₦}195,000 + \text{₦}35,000 = \text{₦}230,000 credit.
The branch has not yet credited the Head Office Current Account for goods dispatched by the head office.

Anahtar Kavram

Head Office and Independent Branch Inter-Entity Current Account Reconciliation
Tahmini Süre:1m 30s
ÖncekiSayfa 5 / 5
Departmental and Branch Accounts Alıştırma Soruları — JAMB UTME — Sayfa 5 | Examkin