Journal entry

Dear Friends,

What will be the journal entry if a company has paid telephone charges on behalf of its sister concern company?

As I thinks,

If the accounts of both the company are maintained separately, then sister concern will be debited for telephone expense amount.

 

@ sunny

freind can you show me the journal entry in the books of both the company?

This is the case of Inter Co. transactions.The Co. which is paying charges on behalf of another co. will debit the A/c of that another co. in its books and will credit its Cash/Bank A/c..

The co. whose expenses are paid by the sister concern will journalise the following entry :

 

Telephone Expenses A/c------Dr.

       To Sister Concern A/c (which has paid exp.)

@ KARAN

THNKS A LOT

If telephone exp. Is paid by X LTD. ON BEHALF OF Y LTD. JOURNAL ENTRY BY X LTD. Y LTD.(dr.) TO BANK JOURNAL BY Y LTD. TELEPHONE EXP(dr.) TO X LTD.

JV in sister concern

Telephone charges A/c Dr

      To parent company.

JV in Parent Concern

Sister Company Dr

      To Telephone Charges

 

 

 

jv

telephone exp a/c --dr

to sister concern ( which paid exp)

 

Karan u r right!!!!!!!!!!!