Inter Company transactions accounting

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 June 2011 Can anyone clarify the following inter company transaction:

Suppose if I want to allocate salary & other cost between 2 companies, which account should i debit/Credit with regard to expenditure part.

If I debit/Credit salary account, then PF ,ESI Contribition does not match in the P & L account. Same is the case with TDS related accounts. I would have paid TDS from one company and later on when I allocate and transfer the expenses to other company then the TDS on Gross amount in P & L does not match.

OR, is there any other head under which such inter company expenses can be absorbed.

CA Pushpendra Gaur

CA Pushpendra Gaur (Expert)
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10 October 2011 Well in case of allocation of salary or other expense to other company

Debit the name of the company on whose behalf payment is made or particular expenses is allocated

CA Pushpendra Gaur

CA Pushpendra Gaur (Expert)
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10 October 2011 Well if at the time of payment of the salary or other expenses, the expenses or salary account was debited

then while transferring the same expenses A/c must be credited

CA Pushpendra Gaur

CA Pushpendra Gaur (Expert)
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10 October 2011 Well when u r transferring the Salary to another company, then particular PF, ESI Contribution should also be transferred to another site corresponding to the salary expenses transferred

CA Pushpendra Gaur

CA Pushpendra Gaur (Expert)
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10 October 2011 If the following entry was passed at the time of payment of salary or expenses

Salary A/c DR
TO Employee PF Contri A/C
To Employee ESI contri A/c
To Bank A/c

Expenses A/c DR
To TDS Payable A/c
To Bank A/c

CA Pushpendra Gaur

CA Pushpendra Gaur (Expert)
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10 October 2011 The entry to be passed for the transfer should be

Other Company Name A/c DR
To Salary A/c

Other Company Name A/c DR
To Expenses A/c

(The above entries to be passed with full amount of salary or expenses)

CA Pushpendra Gaur

CA Pushpendra Gaur (Expert)
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10 October 2011 Now look you may be having doubt relating to TDS, PF and ESI Contri

Look brother, All of the above a/cs are of personal nature and mere liability a/c they are not expenses a/c,

when u talk about the employer's contribution of PF and ESI

The proportionate amount of the employer's contribution should also be transferred to the Other Company

CA Pushpendra Gaur

CA Pushpendra Gaur (Expert)
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10 October 2011 The entry for the above transaction will be

Other Company A/c DR
To Employer's PF Contri
To Employer's ESI Contri A/c

the above entry to be passed with the proportionate amount of salary transferred

In case of TDS please make manual tds renciliation by reducing the amount of TDS paid on other behalf from total TDS

don't trace the amount dirrectly from the books same with case of PF & ESI

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