Combined income statement-branches, Financial Accounting

Combined income statement

The figures to appear in the combined income statement are based on the following diagram:

1009_combined sttatement.jpg


1) An arrow pointing into a box refers to purchases by the organization represented by the box

2) An arrow leading out of the box refers to sales made by the organization represented by the box

3) The outside box refers to the combined entity.

4) When the head office purchased and received goods costing sh 18,000, the combined entity also purchased and received goods costing Sh 18,000.  Thus the purchases reported by the head office (column 1) will usually be the purchases reported by the combined entity (column 3).  The only exception would be if the branch also had external purchases.

5)If the head office and branch made sales of Sh 15,000 and Sh 9,000 respectively, the combined entity will have made sales of Sh 24,000 (Sh 15,000 + Sh 9,000)

6) The sales of Sh 7,150 made by the head office (which is deemed to be a purchase by the branch) cannot be claimed to be a sale or purchase by the combined entity.

7) The combined closing stock should be shown at original cost to the combined entity. This means that the combined closing stock is made up of two components, all at original cost:

  • Closing stock at the head office at an original cost of Sh 1,500;
  • Closing stock at the branch.  This had cost the branch Sh 550 (as can be seen in the income statements), but had an original cost of Sh 500 (550 x 100/110) when received by the head office on behalf of the combined entity.

 

 

Posted Date: 12/12/2012 1:56:24 AM | Location : United States







Related Discussions:- Combined income statement-branches, Assignment Help, Ask Question on Combined income statement-branches, Get Answer, Expert's Help, Combined income statement-branches Discussions

Write discussion on Combined income statement-branches
Your posts are moderated
Related Questions
Question 1 Explain the five accounting concepts with an example Separate entity concept Going concern concept Money measurement concept Cost concept Dual aspect

Q. Explain Zero Base Budget? Zero base budgeting can be defined as - 1) An operating planning and budgeting process which requires each manager to justify his entire budget


Trade credit creates accounts or debtors receivables. Trade credit is utilized as a marketing tool to expand competitive advantage over trade rivals. A firm's investment in account

Company X is presumably doing well. The corporation's balance sheet last September 31 can be summarized as follows: Total Assets

what is the process to complete my debtor management project.

Lockheed Martin's management wishes to find out whether they have excess debt capacity. Its current market value of equity is $40 b and its book value of debt is $

An intersting point to not is that there is a difference in the tax treatment of income from Limitied Liability Companies (LLCs) and Corporations. What is this difference and what

After discontinuing the ordinary business operations and closing the accounts on May 7, the ledger of the partnership indicate the following: Cash $75,000 Non cash 105,000 Liabilit

Q. Explain about Mutual Fund? Mutual Fund - Investment Companythat usually offers its shares to general public and invests the proceeds in a diversified portfolio of SECURITIES