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Branch reconciliation: HO debits Branch A/c for ₹50,000 of goods sent, but branch receives only ₹45,000 (₹5,000 in transit). Reconciliation requires:
AGoods in transit ₹5,000 is shown in HO balance sheet
BBranch records ₹50,000 immediately
CHO writes off ₹5,000
DBoth A and B
Answer & Solution
Correct answer: A. Goods in transit ₹5,000 is shown in HO balance sheet
1. Step 1: Goods in transit appear on the side where they have NOT yet been received.
2. Step 2: HO shows them in its balance sheet as Goods in Transit asset until branch receives.
3. Step 3: Hence (A).
_Source: ICAI BoS CA Inter Paper 1, Ch 15 "Accounting for Branches including Foreign Branches"_