Accounting Treatment Of Goods In Transit
Normally, the head office sends goods to the branch and it is immediately recorded by head office in its books. But, the branch will record it when the goods are physically received by the branch. Similarly, sometimes the branch returns goods to the head office and is immediately recorded by branch. But the return of goods will be recorded by head office when the returned goods is duly received by them. Therefore, the goods which are on the way to branch/head office are called 'goods in transit'.
Adjustment entry will have to be passed to incorporate the goods in transit in the books of head office. It is because all in transit items are normally detected by head office after receiving the trial balance or the copy of final account. Goods in transit will appear on the assets side of head office balance sheet.
The entry for goods in transit is:
Goods in transit A/C.........Dr.
To Branch A/C
Accounting Treatment Of Cash In Transit
All the branches send cash at regular interval to head office. But, at the end of accounting period, some cash sent by the branch are still in transit. Therefore, to record such transit is cash in the books of head office, the entry will be:
Cash in transit A/C............Dr.
To branch A/C