Cash Transfer Bank / Inter-Head Office and Branch Journal

The world of accounting is very broad, by understanding accounting treatment well, all kinds of transactions can be written well. In advanced accounting practices, it is very common for you to meet transactions involving the head office to the branch, and branches to branches.

One of the most common transactions is cash and bank transfer transactions. The problem is that the transfer is not appropriate if it is recognized as income or expense. If if it can be recognized as income and expense, it will be very easy to treat. So, what kind of accounting treatment is needed?

In general, cash and bank transfers that occur between the head office and branches as well as branches and branches will bring up a new account, meaning that an account needs to be made as a link. More details, please learn the explanation below.

Liaison account

get money

For the naming of the account itself is very diverse. But in principle, the head office will create an account that is classified as an asset in the balance sheet, while the branch creates a debt account. In this article, I will create an account named Branch Accounts (for head office), and Central Debt (for branches).

That is if the center and branches are yes, what about branches and branches? There are two alternatives, first create a new account again to connect between branches, in this article I will create an account named Inter Branch Accounts and Inter-Branch Debt. The second alternative, connecting between branches by involving the head office, will still use a liaison account between the center and the branch but by making a fictional journal in the central bookkeeping with the Ayat Silang account. To make it easier to understand, learn also Ayat Silang on the link above!

Oh yeah, in this article I assume the bookkeeping of the center and branches and branches and branches is different, so the bookkeeping is separate. If it is still in one book, what I explained in this article does not apply, just make a transfer journal as usual.

Inter Head Office and Branch Transfers

cash transfer

For the account name I have explained above, now there are examples of transactions that often occur. For example, on June 1, 2019 the head office transfers budget funds to branch C of 10,000,000 via bank transfer, because of different banks, there is an administration fee of 6,500. On August 2, 2019, the transfer center for additional working capital to branch C is 20,000,000 in cash.

Explain? Why do I charge administration fees to branch C? This is because these costs arise for the interests of branch C, huh. For example, I charge to the center, later there is the term “central cost distribution” to make NOL the costs that occur at the center and charged to all branches (I discuss it later), this can be detrimental and affect the performance of other branches because costs only arise for the interests of branches C, not all branches.

Are the accounts receivable and payable above required to be repaid? This depends on the policy of each company, usually the account is not required to be repaid. The accounts receivable and debt will be reversed (such as a repayment journal) when the transfer branch returns to the center, for example a sales deposit. If there is a sales deposit or a transfer branch to the center for other matters, then the journal only needs to turn the journal over.


Transfers Between Branches and Branches

cash transfer

Go directly to the example, for example on June 10, 2019 Branch A borrows funds to Branch B amounting to 10,000,000 for merchandise expenditure via the bank with an administration fee of 6,500.

Next: Accounting journal for the formation of firm partnerships. Okay, guys, that’s the cash/bank transfer journal between the head office and branches and branches to branches. Hopefully the above explanation is useful and helps you to do a good accounting book. Don’t forget to share this article too, thanks and good luck.