Concept:When goods are received by a branch from its head office, the branch treats the transaction as a purchase.
This affects the purchases account and the head office current account.
Explanation:Goods received from head office are recorded in the branch books as purchases.
The purchases account is an expense account, so it increases with a debit entry.
The head office current account represents the value owed to the head office, so it is credited.
This means the journal entry will be:
Debit: Purchases account
Credit: Head office current account
Therefore, if head office is credited, the corresponding debit entry goes to purchases.
Answer:D. purchases will be debited