ACCOUNTING SOLUTIONS

SCO: 209, First Floor, Sector-36/D. Chandigarh (M): 0172-5017149, 9876149390,9915169925
BRANCH ACCOUNTING
Ans. Meaning of Independent Branch:- Always H.O. maintains books of accounts related to Branch
itself to avoid cost of maintaining accounts at two places. This method is useful when branches
are small. If the branch is big it usually maintains its own books of accounts, extracts own trial
balance and prepare its own trading and profit & Loss Account. When Branch maintains its own
books it is treated as an Independent branch.
Books Maintained by branch
The independent branch maintains the whole lot of books as required by normal business
activity.
The following books are maintained:
a. Journal Book
b. Ledger book
c. Cash Book
d. Bank Account
e. Debtor Ledger
f. Creditor ledger
g. Fixed Assets Ledger
h. Purchase and Sales book
INCORPORATION OF BRANCH TRIAL BALANCE IN HEAD OFFICE BOOKS
As we know that in case of independent branches, separate set of books have been
maintained at every branch. But to get the overall performance and result of the business, the
accounts of Branch should be incorporated in the books of head office. Thus, Trial balance of
branch has been incorporated in the books of Head Office at the year end.
The following is the procedure to incorporate the branch Trial balance under the two
different methods:

FIRST METHOD:- In this method, the trading 7 profit & Loss A/c of the branch is prepared in the
regular way in the books of head Office.
The entries to be passed are as follows:
(i)
Debit branch Trading Account and Credit Branch Account with the total of the items
usually debited to a trading Account, such as opening stock, purchases, wages.
Manufacturing expenses etc.
Branch Trading A/c
Dr.
To branch A/c
(With Opening Stock, Purchases, Direct expenses, Wages)
(ii)
Debit branch account and credit branch trading A/c with the total of items to be
credited to the Trading Account such as sales and closing stock.
Branch A/c
To branch Trading A/c
(With sale & closing Stock)
(iii)
Debit branch Trading Account and Credit branch P & L A/c with the Gross profit revealed
by the Trading A/c.
Branch Trading
To branch P & L
(For Profit)
While for loss entry will be:
Branch P&L
To branch Trading A/c
1

SCO: 209, F.F.Sector-36/D Chandigarh.0172-5017149, 9876149390, 9915169925

Branch A/c Dr. (If such items. only one entry regarding Net Profit is required after making trading & P & L as a result reducing the volume of entries. Branch P & L A/c Dr. 9876149390. Branch A/c To branch liab. For Profit Branch P & L A/c Dr.F. Chandigarh (M): 0172-5017149. Debit Goods in Transit & Cash in Transit and Credit Branch A/c. e. (the entry will be reversed if there is loss). To branch A/c SECOND METHOD:-Under this method branch results are prepared in Memorandum Manner. 9915169925 . To General P & L A/c For (Loss) General P & L A/c Dr.0172-5017149.. shown in Adjustment) Goods in Transit A/c Dr. To General P & L A/c (b) For incorporating branch Assets & Liabilities. F. the following entries has been made: Branch Assets To branch A/c Branch A/c To Branch Liabilities Thus in the second method.ACCOUNTING SOLUTIONS SCO: 209.Sector-36/D Chandigarh. To branch A/c Debit branch A/c and Credit Branch P & L with the total of gains or incomes such as Discount earned etc. Sector-36/D. Cash in Transit A/c Dr. 1 SCO: 209. First Floor.9915169925 (iv) (v) (vi) (vii) (viii) (ix) Debit Branch P & L A/c and Credit Branch Account with total of various expenses and losses. The entries needed under this method are: (a) For incorporating branch net Profit after making Trading & P & L A/c Branch A/c Dr. Depreciation.g. To Branch P & L A/c Debit branch Assets individually and Credit branch Account with the total of the assets. Discount etc. 9876149390. Salaries. Rent. Branch Assets To branch A/c Debit Branch Account and Credit branch Liabilities. To Branch P & L Debit branch P & L A/c and credit General P & L A/c with the Net Profit revealed by branch p & L A/c.

7.O. Sr. Head office. deposited at local bank or remitted to H. They are normally not allowed to make own purchases. 9876149390. Place of Activity In case of branch account. Incorporation of branch trail balance in head office books. Trial Balance A trial balance has been extracted Trial Balance is not required to be from the ledger maintained at extracted as accounts are branch level. What do you mean by an Independent branch? How does it differ from Dependent branch? Ans. E. 5. the In case of departmental accounts. Sale of Goods These branches sell goods received These branches sell only those from head office as well as from goods which are supplied by the the purchases made by them. same activity of business is done at different activities are done the various locations either in same under the same roof at one town or different towns. Chandigarh (M): 0172-5017149. location through its outlet.g. Store deals shoes operating at different in Grocery. Debtors Register are maintained. Sector-36/D. Meaning of an independent Branch DIFFERNCE BETWEEN INDEPENDENT & DEPENDENT BRANCH Sr. 4.ACCOUNTING SOLUTIONS SCO: 209. 2. Basis Accounting System Independent Branch Dependent Branch Independent branch keeps full The accounts of branches are system of accounting at their place.Sector-36/D Chandigarh. 6.F. Remittance of Cash Independent Branches are not All the daily cash sale and required to remit all the cash daily collection from debtors will be to head office. F.. 9915169925 . so Trading/P&L branches can be made by three Account A/c has been prepared in normal different methods viz. Gift items. Bata location e. books of Branch is to be made before finalising the Accounts.0172-5017149. Point of Payment Branch keep the required cash to All branch expenses of regular of Expenses meet the expenses of regular nature like salary.9915169925 1.g. Debtors way. 1. system. Difference between branch & Department Accounts The following are the main points of difference between branch Account and Departmental Accounts. paid directly by head office. 2. Methods of Accounting is done on the double Accounting under Dependent Preparing Final entry system basis. 3. First Floor. 9876149390. –X Deptt. Reconciliation Reconciliation between branch There is no need of reconciliation Account in books of head office as accounts are maintained at and head office Account in the head office level itself. How are Branch and Departmental Account Differ? Ans. At branch only Cash Register. Branch managers are allowed to incur petty expenses only. Rent normally nature with themselves. Cards etc. maintained at the Head Office level. maintained at Head Office. Final Account system and Stock and Debtors system. 1 SCO: 209. Basis Branch Account Departmental Account 1.

Accounting 3. In departmental account. Independent branch. Transactions Debit Credit 1. branch A/c Concern) 4.ACCOUNTING SOLUTIONS SCO: 209. and branch is must activity because if there is any difference between two if should be adjusted accordingly. This account is a nominal account in nature and is prepared to calculate profit and loss for each branch.O. Reconciliation of accounts between H. Departments can be divided only on basis of activity like Garments Deptt. of As branches are at different locations and expenses of them are specifically related to them these are directly charged to the said branch. For beginnings balances Branch A/c Branch Assets A/c of assets (next year) 8. DEBTORS SYSTEM: This system is adopted generally in those branches which are fairly small in size.O. For transferring the Goods sent to branch A/c Purchase (in trading concerns) balance of goods sent to or Trading A/c (in mfg. Sector-36/D. Under this system. In case of departmental account there is no way to maintain separate set of accounts as all activities done collectively. Types In case of branch accounting is done at the head office level except in case of an independent branch which kept their own records. In branch accounting. Treatment Expenses 4. The goods supplied by the head office to branch may be either at cost price or at cost plus profit. Grocerry Deptt. For branch profit Branch A/c General profit & Loss A/c 11.0172-5017149. First Floor. F. 3. When cheque or draft is Branch A/c Bank A/c sent for branch expenses 5.Sector-36/D Chandigarh. Of one business. Chandigarh (M): 0172-5017149. wholesale and Retail Branch. When goods are sent to Branch A/c Goods sent to branch A/c branch 2. The following are the journal entries which are passed in the books of the head office to record branch transactions. expenses are common for whole business and as a result these have been allocated to different departments on some equitable basis. For return of goods to Goods sent to Branch A/c Branch A/c H. 9876149390. the head office opens s separate account for each branch in order to record all transactions relating to branch. Sr. For closing balances of Branch A/c Branch Liabilities A/c liabilities 9. When cheque or draft is Bank A/c Branch A/c received for remittance 6. In case of departmental accounts there is no need of reconciliation as activities of different departments are at one place. For branch loss General profit & Loss A/c Branch A/c 1 SCO: 209.F. For closing balance assets Branch Assets A/c Branch A/c 7. Reconciliation 5. 9876149390. foreign Branch. Toys Deptt. For opening balances of Branch Liabilities A/c Branch A/c liabilities (next year) 10. Branches can be divided in different headings like Dependent Branch.9915169925 2. 9915169925 .

Chandigarh (M): 0172-5017149. branch Debtors. If the branch account is also prepared. such as branch stock. Goods are marked on invoice price to achieve the following objectives: (a) In order to keep secret from the branch manager the cost price of the goods and profit made.e. F. however. so that the branch manager may not start a rival and competitive business with the concern. the profit or loss made by the branch is determined by preparing branch Trading and Profit & Loss Account at cost price.The branch records are not in any way affected due to invoicing of goods at cost plus profit. instead of opening one branch account. The profit and loss as disclosed by this account is exactly same as that of the branch account prepared according to Debtors/ Synthetic system. The working of this system will be clear from the following examples. some accounting adjustments. in addition to the branch Trading & profit and loss Account. The branch cash or petty Cash account may sometime be required to be maintained if the branch is permitted to use the available cash for making certain payments.. First Floor. Then branch account under such circumstances. then such a branch account will be treated as a personal account and not considered in the nature of a nominal account under the Debtors system. goods sent to branch. 9915169925 . According to this system. for eliminating the profit element included in (1) branch opening stock. branch Expenses. Sector-36/D. 9876149390. To Branch A/c (ii) For adjustment of excess price of the closing stock of unsold goods at branch Branch Account Dr. To Stock Reserve A/c (iii) For adjustment of excess price of goods sent to branch less returns to head office Goods sent to branch A/c Dr.ACCOUNTING SOLUTIONS SCO: 209. (2) goods sent to branch less returns made by branch to head office and (30 branch closing stock. But. the branch manager is required to sell the goods at invoice price only. cost plus some percentage of profit. It should be carefully noted that all expenses whether paid by the head office of by the branch are debited to the Trading and profit & Loss Account prepared for the branch.When the goods are sent by the head office to the branch at invoice price. and branch Asset etc. It is an elaborate method of keeping branch accounts and is considered very useful where the branch turnover is sufficiently large and where a greater degree of control is sought to be exercised by the head office over the branch. as stated below are required to be passed in the books of the H. 1 SCO: 209. separate accounts are opened for various transactions at branch. FINAL ACCOUNT SYSTEM:According to this system. To branch A/c Closing stock should always be valued at cost or market price whichever is lower. STOCK AND DEBTORS SYSTEM: There is yet another method of calculating profit and loss of a branch which is popularly known as ‘Stock & Debtors’ system or ‘analytical Method’.F. stock at any time must be equal to opening stock plus goods received from head office minus sales made at the branch. will show a debit balance which will be equal to net worth or net assets available at branch at the end of the according period. Preparation of Branch stock Account will. i. and (b) In order to have effective control on stock i.e. as is done in case of Debtors system. It should be further noted that the branch.Sector-36/D Chandigarh. 9876149390. Trading and profit & Loss Account is only a memorandum account not forming part of the full accounting system.O. According to this system. The working of the system will be clear from the following example. (i) For adjustment of excess price of the opening stock at branch Stock Reserve A/c Dr. a separate ledger for each branch will have to be maintained at head office for keeping accounts. in order to calculate the profit of loss made by the branch. vary from branch to branch depending upon the method of charging out the goods sent to branch.9915169925 Invoice Price Method:. Accounting Adjustment required in head Office Books:.0172-5017149..

The balance of this petty cash account represent petty cash available in hand at the end of the accounting period. Transactions Debit Credit 1.Sector-36/D Chandigarh. Goods in transit Good in transit A/c Branch Stock A/c 13.0172-5017149. F. Cash sales at branch remitted to Branch Cash A/c Branch Stock A/c H.This account maintained in the books of the head office is credited with goods sent to branch and is debited with goods returned by branch. Sr. Branch Profit & Loss Account:-This account is prepared to ascertain the profit or loss made by the branch during the accounting period. At the end of the accounting period. Cash received from branch debtors Branch Cash A/c Branch Debtors A/c remitted to H. The balance of this account represents gross profit or gross loss and the same is transferred to branch Profit & Loss Account.O. Branch Petty Cash Account:. allowed Branch Expenses A/c Branch Debtors A/c 7. 8. This account is credited with cash sales. 9876149390. The balance of this account represents net profit or net loss for the year. Goods returned by branch Goods sent to branch A/c Branch stock A/c 3. First Floor.ACCOUNTING SOLUTIONS SCO: 209. Branch Cash Account:-This account is maintained for recording all cash transactions relating to the branch. 3. 4. 5. goods returned to head office goods sold by branch and goods returned by customers to the branch etc. The various branch expenses or losses are debited and if there is any income. 6. 2. Good sent to Branch Account:. credit sales made by the branch. Chandigarh (M): 0172-5017149. Bad Debt & discount etc.This account is prepared when the branch sells goods on credit. Transfer of branch gross profit Branch Stock A/c Branch P/L A/c 15.9915169925 (a) 1. This account is debited with the balance of petty cash available in hand at the beginning of the accounting year and with cash sent to the branch by the head office for petty cash and is credited with all petty cash expenses incurred by the branch. The following journal entries will be required for preparation of branch accounts according to stock & Debtors’ system in the books of H.O.This account is similar to that of the branch Trading Account where items like goods received from head office. Branch Stock Account:. 9876149390. the same should be credited to this branch profit & Loss Account. It is necessary for recording all transactions concerning branch debtors and for ascertaining the balance of debtors at branch. Branch Debtors Account:.This account is maintained where the branch makes some petty cash payments. Surplus of goods in branch stock Branch Stock A/c Branch P/L A/c 10. Good lost in transit being abnormal Branch P/L A/c insurance Branch Stock A/c loss claim receivable A/c (if any claim is admitted) 14.O. The gross profit or loss at the branch. Goods charged to Branch at Cost Price: In this case the following accounts are prepared in the books of the head office. Shortage of goods in branch stock Branch P/L A/c Branch Stock A/c 9. Goods sent to branch Branch Stock A/c Goods sent to branch A/c 2. This account is considered quite essential where the branch is permitted to purchase goods locally and to incur expenses at branch out of cash available with the branch. the balance of this account is transferred to Purchases Account in case of trading concern and to the Trading Account in case of a manufacturing concerns. are dealt with This account is debited with opening stock at branch. the goods returned by branch to the head office and closing stock at branch. Returns from Customers Branch stock A/c Branch Debtors A/c 6. Sector-36/D. goods sent to branch and goods returned to the branch by customers. as determined from the branch Stock Account is transferred to this account. Transfer of branch net profit Branch P/L A/c General P/L A/c 1 SCO: 209. 4. 9915169925 . Credit sales at branch Branch Debtors A/c Branch Stock A/c 5.F. Expenses paid by head office Branch Expenses A/c Cash A/c 11 Transfer of branch expenses to Branch P/L A/c Branch Expenses A/c branch P/L A/c 12.

Branch Cash Account and Branch Assets Account etc. This method of accounting helps the head office to exercise a better control over the branch stock. To branch Debtors A/c (iv) For discount allowed.  Branch profit & Loss Account:. the balance of this account is transferred to Purchases Account. To branch Stock A/c to branch Stock A/c (iii) When cash is received from Debtors Cash A/c Dr.F. are branch Expenses Account. 9876149390. shortage of stock at cost value and losses of stock etc.0172-5017149.  Branch Adjustment Account:. allowances and bad debts Branch Expenses A/c Dr. To goods sent to branch A/c (ii) When sales are made by the branch (a) For Cash Sales (b) For Credit Sales Cash A/c Dr. these accounts are prepared in the same way as those when goods sent to branch are charged at cost. The branch gross profit or loss as shown by the branch adjustment account is transferred to the branch profit & loss account. The following journal entries are made relating to various types of transactions under this method. (i) When goods are sent to branch Branch Stock A/c Dr. as discussed above is particularly considered very useful and appropriate where goods are invoiced to the branch t Selling Price. This account is further credited with incomes and gains.Sector-36/D Chandigarh. This account clearly brings into focus the shortage or surplus in stock at branch. except that all entries are made at invoice price.e. First Floor.This account is prepared to adjust the loads included in the value of opening and closing stock at branch. The balance of the account represents net profit or loss made at the branch during the accounting period. 9915169925 . unless there is any surplus or shortage. after posting all the relevant entries should be equal to the stock in hand available at branch. if any at branch and cost value of surplus in branch stock etc. Branch Debtors A/c Dr. which is finally transferred to general profit & loss account. This is done by eliminating the profit element or the ‘loading’ included in the value of opening and closing stock at branch. The balance of the account represents the gross trading profit or loss which is then transferred to the branch profit & Loss Account. Branch Debtors Account. Chandigarh (M): 0172-5017149. F. The profit or the ‘load’ included in such surplus or shortage should be transferred to the branch Adjustment Account while the cost of such surplus or shortage should be adjusted to the branch profit & Loss Account. The balance of this account.This account is prepared for ascertaining the amount of gross profit earned by the branch. Sector-36/D.This account is prepared to ascertain the net profit or loss at the branch.  Stock Reserve/suspense Account:. the other accounts which are required to be prepared according to ‘Stock & Debtors’ system under method (B) referred to above. goods sent to branch. 9876149390. To Branch Debtors A/c 1 SCO: 209.ACCOUNTING SOLUTIONS SCO: 209. Apart from the above.9915169925 GOODS CHARGED TO BRANCH AT SELLING PRICE The stock and Debtors system. After adjusting the ‘Loading’ i. The branch expanses. A brief description of various account opened in the books of the head office is given below:  Branch Stock Account:. as already stated in method (A) above.this account is prepared in the same way as that when goods are invoiced at cost. This account is credited with the load included in the closing stock at branch and its balance is carried forward to the next accounting period. are debited to the account.  Goods sent to branch Account:-the purpose of preparing this account is to ascertain the exact value of the goods sent to the branch during the accounting period. less returns made by branch to head office and in surplus or shortage in branch stock etc. the profit included in such goods.. This account is credited with the value of goods sent to branch selling price and is debited with the value of goods returned by the branch at the same invoice value.

9876149390. To branch Debtors A/c When goods are retuned by branch debtors direct to head office Goods sent to branch A/c (cost) Branch Adjustment A/c (Loading) To branch Debtors A/c For normal loss of stock Branch Adjustment A/c Dr.ACCOUNTING SOLUTIONS SCO: 209. Branch Stock A/c Dr. 9876149390. & L. A/c 1 SCO: 209. A/c Dr. & L. To Cash For closing branch expenses account (excluding cash in hand at the end) to branch P. Sector-36/D. To branch Stock A/c When goods are returned by branch debtors Branch Stock A/c Dr. account Branch Adjustment A/c (With non-recurring expenses) Branch P. To Stock reserve A/c For adjustment of excess price of goods sent to branch Goods sent to branch A/c Dr. Branch Adjustment A/c Dr. To (Goods sent to Branch A/c (With loading) (With cost) To branch Stock A/c to branch Adjustment A/c (with invoice price) (with loading) For apparent profit over the invoice price Branch stock A/c Dr. 9915169925 . Chandigarh (M): 0172-5017149. [with loading only] Branch P. (With recurring expenses) To branch Expenses A/c For adjustment of excess price of the opening stock Stock Reserve A/c Dr. To branch Adjustment A/c For adjustment of excess price of the closing stock Branch Adjustment A/c Dr. & L. To Branch Adjustment A/c For branch expenses paid in cash Branch Expenses A/c Dr. [with invoice price] To branch Stock A/c For abnormal loss.0172-5017149. First Floor. [With cost] To Branch Stock A/c [with invoice price] When goods are transferred from one branch to another branch Transferor branch Transferee Branch Goods sent to branch Dr. (With cost) (With invoice price) Branch Adjustment A/c Dr. F. waste or leakage or shortage of stock Branch Adjustment A/c Dr. To Branch Adjustment A/c For insurance Claim recoverable Insurance Claim Dr. A/c Dr.Sector-36/D Chandigarh. & L.F. To Branch P.9915169925 (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv) (xvi) (xvii) For agreed allowances to customers off selling price already taken into account while invoicing.

A/c Dr. To branch P..0172-5017149. Made by the branch To branch A/c To Cash b) If the payments is Branch Fixed Asses A/c Dr. the following entries are passed. To Purchases or Trading A/c Dr. When an assets is purchased. This will be more clear from the following illustration. This account is debited by cash sent to the head office. that belongs to the head office. these unsold goods at the branches must be reduced to cost price by making a stock reserve for unrealised profit for the difference between eh wholesale and cost price and will be debited to the head office profit and loss account. Sector-36/D. 200-Rs. 9876149390. & L. goods supplied to head office. BRANCH KEEPING FULL SYSTEM OF ACCOUNTING Branches keeping full system of accounting or independent branches are those branches which also purchase goods from the market besides getting the goods from the head office. 40 (i. This account will have the same entries but on the reverse sides. Now we deal certain transactions which require special attention. The following entry will be passed: 1 SCO: 209. 160 at wholesale price but both head office and branches sell goods at Rs. trading and profit and loss account and balance sheet. & L. pay expenses from the cash rehashed and deposit cash in their own account. profit made by the branch will be Rs. Similarly. the head office will also maintain a branch account for each branch. gross profit) Branch Adjustment A/c Dr. & L. Chandigarh (M): 0172-5017149.ACCOUNTING SOLUTIONS SCO: 209. as previously the head office must have earned profit while sending goods to the branches. Head office books Branch Books a) If the payments is Branch fixed Assets A/c Dr. these branches operate as an independent unit for all practical purposes but their only link with the head office is that they are owned by the head office and whatever their profit or loss will be. No Entry Made by the head To bank Office (ii) Depreciation of Fixed Assets:.Generally the branch fixed assets are maintained in the books of head office. & L. 200 –Rs. A/c For closing the goods sent to branch account Goods sent to Branch A/c Dr. Such branches keep complete set of double entry books and prepare their own trial balance. Rs. In other words.9915169925 (xviii) (xix) (xx) For transfer of balance of branch adjustment A/c (i. Such branches open head office account in their books. General P. then. The difference between eh retail price and wholesale price will be the profit made by the branch. A/c For transfer of profit or loss to general profit and loss account (a) If profit (b) If loss Branch P.Sector-36/D Chandigarh.F. charge made by head office for rendering services and profit earned by the branch. Suppose if an article costs to head office Rs. The goods are sent by the head office to the branches at Wholesale price and if all the goods are sold there is no problem but if some goods remain unsold at the end of the accounting year. goods received from the head office.e. First Floor.As branch fixed assets are maintained in the books of head office so entries relating to depreciation will also be passed through head office account.100). payment made by the branch for purchase of assets and loss to be borne by the head office and credited by cash received from the head office. 9876149390. Head Office A/c Dr. 160) and not Rs. (i) Purchase of Branch fixed Assets:.e. They can also supply goods to the head office. & L. depreciation of branch fixed assets. 100 (Rs. F. 9915169925 . 200. A/c To Generl P. DISTINCTION BETWEEN WHOLESALE AND RETAIL PROFIT AT BRANCH Sometimes head office also sells goods at retail or list price besides sending the goods to branches at wholesale prices. 100 and it is supplied to the branches at Rs. A/c To branch P.

O.The balance of head office account (in branch books) and branch account (in head office books) should normally be the same and one will make debit and other will credit for all transactions affecting these accounts.If some services such as administration or technical are rendered by the head office to the branch then a proportionate charge for such expenses will be made to each branch by the head office and entry for that will be as follows: H. Sector-36/D. 1 SCO: 209. i. when the account are closed on 31st December (next year). A/c To P. i. 31st December the head office will pass the following adjusting entry: Goods in Transit A/c Dr.0172-5017149. A/c Dr. say on 4th January. But these accounts may differ in balances because of the following reasons: a) Cash in transit:.e..O.O.Sometimes the branch is remitting the cash to the head office before the close of the accounting year.F. To head Office A/c (iv) Reconciliation of transit items:. F. Chandigarh (M): 0172-5017149. While remitting the cash to the head office the branch will debit the head office account but if the remittance is received by the head office after the closing date of accounting year. To Branch A/c Cash in transit or goods in transit will be shown as an asset in the balance sheet. passed in the books of branch or head office (if the intimation of such remittance is received by the head office). so on the last day of accounting year. A/c To Branch Fixed Assets A/c Dr. To branch A/c b) Goods in transit:.O.e. so the two balances. 9876149390.Sector-36/D Chandigarh.ACCOUNTING SOLUTIONS SCO: 209. & L. To Head Office A/c (iii) Head Office Expenses:. A/c (in branch books) and branch Account (in H. 9876149390. P. Books Branch Account Branch Books Dr. & L..9915169925 H. First Floor.Similarly the two balances may differ because of goods in transit Suppose the head office sent goods to the branch on 28th December but those goods were received by the branch on 4th January (next year). H. then head office will not give a credit for the same amount of remittance on 31st December. Branch Books Cash in Transit A/c Head office Books Dr. head office must have debited the account of branch in its books but there will b no corresponding credit to head office account in the books of branch. & L. Cash in Transit A/c To head office A/c OR Dr. say on 28th December. 9915169925 . Books Branch Account Branch Books Dr. P.

) on behalf of H. A/c To branch A/c Dr.O. To Cash A/c (vii) Cash collected by branch on behalf of H.ACCOUNTING SOLUTIONS SCO: 209.O. if goods are supplied by Kolkata branch to Delhi branch and the head office is at Mumbai. 9876149390. then the following entries will be passed in the books of H. To Mumbai Branch. is at Delhi.0172-5017149. then the following journal entries will be passed in the books of head office and the branches: Mumbai books Kolkata Books Delhi branch A/c Dr.O. Chandigarh (M): 0172-5017149. For example. (say for calls in arrears from the shareholders of H. Sector-36/D. such transactions among the branches are called inter-branch transactions.O. To H. First Floor. and the branch: H. and the branch: H. To head Office A/c (vi) Cash paid by branch on behalf of H. 1 SCO: 209.O. A/c Dr.O. 9876149390.if the branch has paid some amount of cash for purchase made by H.if the head office has many branches and there is a possibility that some branch may supply goods or send cash to the other branch.F.O.O:.O.O. To Kolkata branch Delhi Books Goods Received from To Goods supplied to other branches A/c Other branches A/c Dr.Sector-36/D Chandigarh. H. To B/OP A/c Dr. Cash A/c To Calls in Arrears Dr.O. H. F.) then the following journal entries will be passed in the books of H.O.O. A/c (viii) If a bill is drawn by one branch on another branch: If a bill is drawn by Agra branch on Mumbai branch and the H. Books Branch A/c Branch Books Dr. Mumbai Branch Dr. Head office A/c Dr.9915169925 (v) Inter-branch transactions:. Such transactions may be recorded either by maintaining a current account of a branch in another branch’s books or such transactions may be recorded by all branches by passing entries thorough head office account. then the following entries will be entered in the books of H.O. To Bills payable B/R A/c B/R A/c To H. and branches: H.if the branch has collected some cash on behalf of H. Books Agra branch Agra branch A/c Dr.O.O. 9915169925 .O Books Purchases A/c Branch Books Dr.:.