Austin (Finance & Accounts) (40 Points)
21 February 2013The Co' A is holding 4 branches of different operations, i.e B,C,D & E. B is selling goods to D & E as with Cost + Profit
My Querry is
Is the Transaction valid with Cost + Profit
If it is valid then what is the Journal Entry for Internal Payment transfer for Books of accounts.
Thanks
Dhawal Mohnot
(Practicing)
(449 Points)
Replied 21 February 2013
It is a valid transaction. The entry would be of a normal sale and purchase transaction. At the time of consolidation inter group sale and purchase would get knocked off thereby reducing the profit included in the transaction.
Hope this clarifies.
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