Sale outside the state section 4

On 26-4-2011, M/s National Traders received a sales order from Excel Traders, Mumbai for 4 photo copying machines priced at ` 43,000 each. M/s National Traders raised a sales invoice for the said item vide invoice number 012, despatched 2 nos and requested the branch office – National Enterprises to despatch remaining quantity. CST @ 2% was charged while invoicing against C Form. The sale value and CST amount of goods despatched by branch office was reversed on 27-4-2011.

The above is a question given by Tally Solutions in its guidance book and following are the entries they gave:

Entry 1  (Interstate Sale Entry)

Excel Traders    175440

To Interstate Sales 2%             172000

To CST 2% - Interstate Sales   3440

Entry 2  (Reversal of Interstate Sales to Sales Outside the State)

Interstate Sales 2%     86000

To Interstate Sales - Tax Free         86000

Entry 3 (Transferring value of CST to Branch)

CST 2% Interstate Sales    1720

To National Enterprises 1720

My questions are following

I am clear as to the first entry.

But what are they doing in remaining two !!

Thanks

Shivani

shivaniadream @ gmail.com