Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Illustration regarding profit that head office can claim
E Ltd sets up a branch in Nyeri on 1 July 2001. Goods are sent to branch at an invoice price which is 10% above cost. Sales attained during the financial year to 30th June 2002 were Sh 15m and sh 9m at the head office and branch respectively; goods sent to the branch had an invoice price of Sh 7.15m. Purchases by the head office totaled Sh 18m. What is the profit that the head office can claim to have made?
If the head office were to stand alone, it can claim two sets of sales:
Sales to public
Goods sent to branch
(deemed to be ‘sales’ to branch)
%
Sh’000
Cost
100
10,000
6,500
Profit
50
5,000
10
650
Selling price
150
15,000
110
7,150
Sales to public and goods sent to branch (currency columns only) can be combined to generate:
Cost 16,500
Profit 5,650
Selling Price 22,150
If the branch were to stand alone, it must consider its cost to be the value at which “goods were ‘purchased’ from the head office. This of course is the price at which the head office ‘sold’ the goods to the branch (110% of original cost to head office)
6,600
40
2,400
Selling Price
9,000
All this information could be set out in the pro-forma layouts seen earlier as follows:
Head office
Branch
Combined
Sh
Sales
X
___-
_-
22,150
Cost of sales: opening stock
-
Purchases
18,000
GFHO
Closing stock
(1,500)
(550)
(X)
(16,500)
(6,600)
Gross profit
5,650
After arriving at a subtotal of opening stock, goods from head office and purchases, the following steps were applied:
Fund Accounting - Method of ACCOUNTING and presentation whereby LIABILITIES and ASSETS are grouped according to the purpose for that they are to be used. Normally used by governmen
Q. Compute the present value? The offer for the manufacturing rights is for a ten-year period. Annual after-tax cash flow after Year 4 = $660000 Present value of this c
The following items represent liabilities on a firm's balance sheet: a. An amount of money owed to a supplier based on the terms 2/20, n/40, for which no note was executed. b. An a
Prepare a cash budget The following information appeared on the balance sheet of XYZ Ltd at 30 June 2012: Accounts receivable
methods of preparation of trial balance
An investment project requires a net investment of $100,000. The project is expected to generate annual net cash inflows of $28,000 for the next 5 years. The firm's cost of capital
A of surat consigns goods to B of jaipur to be sold at or above invoice price.B is entitled to get a commission of 8% on sales at invoice price plus 25% of any surplus price reali
Exceptions to the rule of lapse There is no lapse in either of the following cases: 1. Where the gift or disposition is made in discharge of a moral obligation recognised by t
Remedies available to beneficiary 1) Injunction - to prevent unauthorised action by trustees; 2) Personal action - a trustee is only liable for his own acts and defaul
The current balance sheet of CBKH shows $800 million of corporate loans ($500 million of which being rated AA- and the remaining rated BBB+), $200 million of bonds issued by an OEC
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd