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Receipt entry and credit note

Nikesh (Account officer) (55 Points)

12 December 2012

Hi Experts..

Our branch and delhi branch have mutal customer and we have received payment from cstomer of Rs. 15,000/- from which 5,000 belongs to delhi branch against their invoice

So what will be entry of recipt in our book and entry for credit note to be issued to delhi branch.

Pls suggest.

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5 Replies

Yogesh Shah (Managing Corporate Finance) (1051 Points)
Replied 12 December 2012

Hi Nikesh,

Receipt entry in your branch will be normal :-

Bank A/c. Debit - 15,000/-

To Customer A/c. - 15,000/-

Now, you want to pass entry for credit note to be issued. Means, you are not actually paying that amount to Delhi branch but you want to pass only adjustment entry. Hence, in such entry Bank account will not be involved. Similarly, Customer account will not come again here. Your entity is following practice of branch accounting and hence in Bal Sheet, there must be inter branch balances. Hence, in my opinion, entry for credit note to be issued will be :-

Your Branch A/c. Debit - 5,000/-

To Delhi Branch A/c. - 5,000/- (credit bal - since payables)

Other views are welcome.

1 Like

Vicky (Finance Professional) (57 Points)
Replied 12 December 2012

You will be passing the following entry in your books:

Bank Account Dr 15,000

Vendor Account Cr 10,000

Delhi Branch Account Cr 5,000

Delhi Branch will pass the following entry in there books:

Your Branch Account Dr 5,000

Vendor Account Cr 5,000

This way at corporate level, you will have Zero inter brach balance and zero balance against the vendor. and Debit balance of 15,000 in Bank Account.

At divisional level 5000 will continue to appear in both branches. To set it off, you may have to transfer the fund of 5,000 to Delhi branch.

Saurabh Gupta (MBA) (26 Points)
Replied 12 December 2012

Hi Nikesh,

Receipt entry may be provided as below.

Bank A/c Dr. 15000

Customer A/c Cr. 15000

Again credit note entry to be provided as below.

Customer A/c Dr. 5000

Delhi Branch A/c Cr. 5000

If you credit whole amount in customer A/c and transfer the other branch part separately will be helpful for you at the time of account reconciliation with customer.

Regards,

Saurabh