Branch Accounting entries

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This discussion clarifies accounting entries when a head office (HO) pays expenses for a branch office. The HO records the transaction by debiting the branch account and crediting the bank account. The branch, in turn, debits its expenses or creditors and credits the HO account. It further clarifies that the HO account in the branch books is a current asset, while the branch account in the HO books is a current liability. Creditors of the branch are classified as current assets if they have a debit balance and current liabilities if they have a credit balance.

shomenathpyne

shomenathpyne (Querist)
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04 July 2021 Dear Sir / Madam
We have a branch office in Bangalore and we are paying expenses like rent salary and also creditors payment of Bangalore Branch office, from our Kolkata Head office Bank account. Please guide me about the Accounting entries.
Regards
Shomenath Pyne

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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04 July 2021 The entries are,
HO entry.
Bangalore branch account dr
To bank account cr

Branch entry in their books.
Salary/expenses/creditors dr
To HO account cr

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shomenathpyne

shomenathpyne (Querist)
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05 July 2021 Sir, Thank you so much for kind valuable reply, only one more query in this regard, that is
1) In the Bangalore branch book a) HO Account ( under current asset ) ?
2) In the HO Book a) Bangalore branch account ( under current liability ) b) Bangalore Creditors ( under current assets or current liabilities ?
Please Guide me.
Thanks and Regards
Shomenath Pyne

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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05 July 2021 1 Credit balance current liabilities.
2 Dr balance current asset.

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shomenathpyne

shomenathpyne (Querist)
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05 July 2021 Thank you so much sir

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