Hi frens. Our company is one of the subsidary(A ltd) of principal company. The principal company has 2 subsidaries.(A ltd& Bltd) Purchases for both the subsidaries are made centrally in (B ltd). But sales are done seperately. How to account for such transactions? Is it possible for inter company transfers? help me with entries too.
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Pls help accounting rules for inter company transactions
Replies (1)
Yes inter company transfer is a possible transaction. It can be just fund movement or purchase or sale.
In case of your example what might happen is , there is one company making purchases on behalf of other, in such a case one can make the party receiving benefit from other be grouped under "Sundry Debtors."
Example : ASS is a subsidiary of MTA. MTA holds ASS & GWE. GWE makes purchases.
In books of GWE :
Purchases
To Suppliers
(When goods are purchased)
When goods are sent to other group of company's
Party's a/c
To sales
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