Mark-up on goods sent to branch offices are recorded in the books by creating
Answer Details
When goods are sent to a branch office, the cost of those goods needs to be recorded in the books of the main office. This is done by creating an entry in the accounts that debits the branch stock account and credits either the stock adjustment account or the goods sent to branch account.
The stock adjustment account is used when the goods are being sent to the branch at a markup, which means they are being sold to the branch at a higher price than they cost the main office. The difference between the cost and the selling price is the markup, and this is recorded in the stock adjustment account.
The goods sent to branch account is used when the goods are being sent to the branch at cost, which means they are being sold to the branch at the same price that they cost the main office. In this case, there is no markup, so the goods sent to branch account is used instead of the stock adjustment account.
Either way, the branch stock account is debited to record the fact that the goods have been sent to the branch and are now part of its inventory.
Option D (cash account and crediting branch stock account) and option E (branch stock account and crediting defalcations account) are not correct because they do not reflect the actual transaction of goods being sent to the branch at a markup or at cost.