The following trial balances for the year ended 31 December 2017 were obtained from the Head Office and Branch of Compassionate Grounds Ltd.

Additional information was as follows:
i) The branch deposited GH¢800,000 on behalf of the head office in the bank on 31 December 2017. No record of this transaction had been made in head office books.
ii) All goods sold by the branch are supplied from the head office at cost plus 25%. At 31 December 2017 goods to the value of GH¢10 million were in transit to the branch.
iii) Inventories at 31 December 2017, excluding goods in transit were as follows:
                                              GH¢’000
Branch at mark up                    8,000
Head office at cost                   14,500
Required:
Prepare for the head office, branch and combined entity of Compassionate Grounds Limited: Statement of profit or loss for the year ended 31 December 2017 and Statement of financial position as at 31 December 2017.                                         (15 marks)

OTL Ltd commenced business on 1 January 2015. The head office is in Ghana and there is a branch in Nigeria. The currency unit of Nigeria is the Naira (₦).

Additional Information:
The trial balance of the head office was prepared before any entries had been made in respect of any profits or losses of the branch. Remittances from head office to branch and from branch to head office were recorded in the books at the actual amounts paid and received.

The rates of exchange were:
On 1 January 2015 ₦80 = GH¢1
Average rate for year 2015 ₦70.4= GH¢1
On 31 December 2015 ₦64 = GH¢1

Required:                                                                                                     (12 marks)
i) Prepare the Trial Balance of the Nigeria branch as at 31 December 2015, in Ghana cedi;

ii) The closing entries, as at 31 December 2015, in the branch account in the books of the head office; and a summary of the Statement of Financial Position of OTL Ltd as at 31 December 2015.

Dum and Sor were in partnership as retail traders sharing profits and losses: Dum three quarters (3∕4) and Sor one quarter (1∕4). The partners were credited annually with interest at the rate of 6% per annum on their fixed capitals, no interest was charged on their drawings.
Sor was responsible for the buying department of the business. Dum managed the head office and Sor was employed as the branch manager. Dum and Sor were each entitled to a commission of 10% of the net profits (after charging such commission) of the shop managed by him.
All goods were purchased by head office and goods sent to the branch were invoiced at cost.
The following was the trial balance as at 31st December 2014.

You are given the following additional information:
i) Inventory on 31st December 2014 amounted to :
Head office         GH¢14,440
Branch               GH¢ 6,570
ii) Administrative expenses are to be apportioned between head office and the branch in proportion to sales.
iii) Depreciation is to be provided on furniture and fittings at 10% of cost.
iv) The provision for bad & doubtful doubts is to be increased by GH¢50 in respect of head office receivables and decreased by GH¢20 in the case of those of the branch.
v) On 31st December 2014 cash amounting to GH¢2,400 in transit from the branch to head office, had been recorded in the branch books but not in those of head office, and on that date goods invoiced at GH¢800, in transit from head office to the branch, had been recorded in the head office books but not in the branch books. Any adjustments necessary are to be made in the head office books
Required:
a) Prepare the statement of profit or loss and the appropriation account for the year ended 31st December 2014, showing the net profit of the head office and branch respectively.                                                                                                               (6 marks)

b) Prepare the statement of financial position as on that date.                                                                                           (6 marks)

c) Prepare the current accounts for Head office and the branch.                                                                                        (3 marks)

LB Ltd also sells building materials to other contractors from its warehouse and is considering setting up another retail branch in a different part of the country.
The directors have been told that the branch can be run directly through the head office or set up a separate entity, but are not sure how the accounting will work.
Required:
Explain to the directors how this transaction should be treated in the books of LB Ltd.                                                   (5 marks)