Lesson Eleven
Introduction
Dear learner this lesson continues with accounting for branches. In the previous lesson we
looked at accounting for dependent branches where goods are sent at cost. In this lesson we are
now going to look at accounting for dependent branches where goods are sent at cost plus mark
up or at selling price
Expected leaning outcomes
By the end of this lesson the learner should be able to
1. Prepare branch stock account
2. Prepare branch mark up account
3. Explain the meaning of mark up and mark up
4. Explain the meaning of surplus and deficit
5. Prepare branch income statement
Where goods are sent at cost plus mark up or at selling price
This is where the head office sends goods to the branch at cost plus a percentage mark up or at
selling price. Similar accounts as when goods are sent at cost are maintained but in addition to
those accounts a branch mark up account is maintained by the head office. This account will
determine the gross profit or loss. where goods are sent at cost plus mark up or at selling price
the branch stock account serves as purely stock movement account and do not determine the
profit or loss.
The format of the branch stock account and branch mark up accounts are as follows
Page 1 of 12
, 1. Branch Stock Account
Branch Stock Account
Bal bld xx Returns to head office xx
Goods sent xx Sales : Cash xx
Returns by customers xx : Credit xx
Goods from other branches xx Goods sent to other branches xx
Direct returns xx Goods stolen xx
Mark up xx Direct returns xx
Surplus xx Mark down xx
Deficit xx
Bal c/d xx
XX XX
2. Branch Mark up account
Branch Mark up Account
Returns by branch xx Bal b/d xx
Goods sent to other branches xx Goods sent xx
Direct returns xx Goods from other branches xx
Returns by customers xx Mark up xx
Mark down xx Surplus xx
Goods stolen xx Gross loss xx
Deficit xx
Gross loss xx
Bal c/d xx
XX XX
The branch mark up account only records the profit element or figure in the items above. When
goods are sent at cost plus mark up or at selling price the following terms arises
Page 2 of 12
Introduction
Dear learner this lesson continues with accounting for branches. In the previous lesson we
looked at accounting for dependent branches where goods are sent at cost. In this lesson we are
now going to look at accounting for dependent branches where goods are sent at cost plus mark
up or at selling price
Expected leaning outcomes
By the end of this lesson the learner should be able to
1. Prepare branch stock account
2. Prepare branch mark up account
3. Explain the meaning of mark up and mark up
4. Explain the meaning of surplus and deficit
5. Prepare branch income statement
Where goods are sent at cost plus mark up or at selling price
This is where the head office sends goods to the branch at cost plus a percentage mark up or at
selling price. Similar accounts as when goods are sent at cost are maintained but in addition to
those accounts a branch mark up account is maintained by the head office. This account will
determine the gross profit or loss. where goods are sent at cost plus mark up or at selling price
the branch stock account serves as purely stock movement account and do not determine the
profit or loss.
The format of the branch stock account and branch mark up accounts are as follows
Page 1 of 12
, 1. Branch Stock Account
Branch Stock Account
Bal bld xx Returns to head office xx
Goods sent xx Sales : Cash xx
Returns by customers xx : Credit xx
Goods from other branches xx Goods sent to other branches xx
Direct returns xx Goods stolen xx
Mark up xx Direct returns xx
Surplus xx Mark down xx
Deficit xx
Bal c/d xx
XX XX
2. Branch Mark up account
Branch Mark up Account
Returns by branch xx Bal b/d xx
Goods sent to other branches xx Goods sent xx
Direct returns xx Goods from other branches xx
Returns by customers xx Mark up xx
Mark down xx Surplus xx
Goods stolen xx Gross loss xx
Deficit xx
Gross loss xx
Bal c/d xx
XX XX
The branch mark up account only records the profit element or figure in the items above. When
goods are sent at cost plus mark up or at selling price the following terms arises
Page 2 of 12
