Journal entries

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 August 2014 Hi, my company is having 6 factories and there are sale & purchase of semi-finished and packing material products between these factories.

CURRENT PRACTICE:
We pass 3 entries because we have Head Office (HO) and 2 factories.

1. at HO we pass
Buying Factory A/c - - Dr To Selling Factory A/c

2. at Selling Factory we pass
HO A/c - - Dr
To Buying Factory

3. at Buying Factory we pass
Selling Factory A/c - - Dr
To HO A/c

My question is whether this long procedure is right & is it required? Why we cannot pass only 2 entries showing buy & sell at Factory itself without involving HO because anyhow we need to prepare individual financials of factories. Is there any alternative for this?

And the same practice we follow for TDS, there we transfer TDS of all factories to HO as follows -

1. at HO we pass
TDS A/c - - Dr
To Bank A/c

After this entry we pass

2. at HO again we pass
Factory A/c - - Dr
To TDS A/c

3. at Factory we pass
TDS A/c - - Dr
To HO A/c

My question is same is it right or there is an alternative like directly paying from factory bank a/c and passing the entry without involving Head Office (HO)?

PLEASE HELP ME . . .

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

20 August 2014 Pass only 2 entries without involving HO.
For TDS pay directly from factory under single TAN, furnish the details of TDS and remittance to HO quarterly, let HO file consolidated quarterly return.

Rupesh Jain

Rupesh Jain (Expert)

21 August 2014 r/sir

at HO level there is no need to record the entry/transaction happen between the branch/factory. branch make the entry in there respective a/c.

you can take only the balance from the branch and you only match the closing balance of all branch it is tally or not.

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