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murshadkhan · Aug 28, 2012, 06:31 AM

Hi,
I have a question Regarding Branch Accounting
I am facing some problem in Branch Accounting the problem is that I do out sourcing job and this is the first time that I have come across like this situation.
I work in company who supplies frozen foods they have
3 Inland dependent Branches.
1 Foreign Branch.
I am using at the moment accounting software sage line 50
I have never done before Branch Accounting how can I make a relation branch with Head Office
For example:
Some transaction has been done in the Head Office How I will treat to them
1- Purchased merchandise on account
2- Remitted cash to the branch
3- Shipped merchandise to branch at cost
4- Paid salary of the branch
5- Paid the Account Payable of the branch
6- Collected cash from branch accounts.
What would be the treatment in the book of Head Office will I have to open some ledger in chart of account please sort my problem out

Best Regard
Murshad Khan

paraclete · Aug 28, 2012, 04:00 PM

What is usually done is to treat the branch like a debtor and open a specific Accounts Receivable account for each branch and pass all transactions through that account, if the balance is a credit at balance date this can be adjusted but from your list of transactions this maybe unlikely. This means you debit the account for outgoings and credit the account for receivables. The Branch should have a similar account in their books so that these accounts are eliminated (compensate for each other) when the accounts are prepared and regular reconciliation should take place.

How you handle this will depend upon the way the books of account are integrated, the Local branches may simply be part of the business and therefore the amounts would be carried to the usual accounts for revenue and expenses or they may have a separate set of books in which case the solution I suggest would apply. The foreign branch would most certainly require a separate set of books so as to comply with local reporting requirements

murshadkhan · Aug 29, 2012, 05:59 AM

Originally Posted by paraclete

What is usually done is to treat the branch like a debtor and open a specific Accounts Receivable account for each branch and pass all transactions through that account, if the balance is a credit at balance date this can be adjusted but from your list of transactions this maybe unlikely. This means you debit the account for outgoings and credit the account for receivables. The Branch should have a similiar account in their books so that these accounts are eliminated (compensate for each other) when the accounts are prepared and regular reconciliation should take place.

How you handle this will depend upon the way the books of account are integrated, the Local branches may simply be part of the business and therefore the amounts would be carried to the usual accounts for revenue and expenses or they may have a seperate set of books in which case the solution I suggest would apply. the foriegn branch would most certainly require a seperate set of books so as to comply with local reporting requirements

Hi,
Still I could not understand please could you examplify anything so that I could understand

Thanks for your reply

paraclete · Aug 29, 2012, 06:05 AM

Originally Posted by murshadkhan

Hi,
Still I could not understand please could you examplify anything so that I could understand

thanks for your reply

How can you not understand ?
Accounts Receivable : Branch A I Accounts payable

Debit merchandise I Credit merchandise