In a branch system there must, of necessity, arise each day numerous entries between the branches themselves, and between the branches and the head office. Direct accounts between branches are out of the question, and separate accounts with the head office are cumbersome, especially when the branches are at all numerous. The most satisfactory method in use is what is known as the branch clearing system. This is a simple and ingenious system which makes the head office the clearing house for all inter-branch transactions. The medium is a statement called the branch clearing statement which is sent to the head office daily by each branch, and on

Account

No................................. 191

BRANCH CLEARINGS ACCOUNT

DR. CR.

Date Of List

Branch

Amount.

Date

Branch

Amount

"At Credit" advices received

Check lists received

Check lists sent

"At Credit" advices sent

Head Office (debits to)

Head Office (credits to)

Total

Total

Balance

Balance

I have compared the above entries with the relative At Credit slips, checked the summations, and have compared the balances shown with the figures of the General Ledger.

The balance to be carried forward from this account should be written on a lower line than that on which the balance from the previous day is given.

......................Accountant

Extreme care must be taken to avoid errors of any kind in this Return

Figure 18 which are entered all transactions with the other branches and with the head office. (See Figure 18.)

So far as possible, the entries passing thru branch clearings account consist of totals only. No particulars are necessary except the name or number of the branch credited or debited.

Check lists originate as debits and are responded to by credits. "At credit" advice slips originate as credits and are responded to by debits. Head office entries, both debit and credit, originate at the branches.

All entries for the statement should be systematically arranged both as to classification and the order of the branches. At the end of the day the branch clearings statement is added and the totals, debit and credit entered in the cash book. The statement is then balanced with the general ledger by the addition of the day's balance, carefully checked, and forwarded to the head office the following day. No change is permissible in the entries. They must be credited or debited to the statement exactly as received. Errors in check lists or advices must be corrected by the creation of separate entries.

16. "At credit" advices. - With the exception of check lists, no branch debits another branch in this statement without first receiving an advice on an "At credit" slip. (See Figure 19.)

All other items collected by one branch for another during a day are entered on an "At credit" slip, the total of which is credited on the branch clearings statement against the name of the branch interested,

"AT CREDIT" ADVICE

THE.............................................................. BANK,........................................................................................................ Transit No..................

191............................ At credit of.................................

Item

Name*

Amount1 (D's[orD.R's.]) Cash Items, etc.

Amount2 (Dep's, B.C's, S.B's, C.D's, Coll'ls, etc.)

For Whose Account

Add column 1 and carry amount) into column 2

* The name need not be given except in the case of items entered in the right-hand column.

Total...

1, 2. - Enter in the left-hand column all payments on account of D's made at maturity; in right-hand column payments on D's made before maturity. (Give due date of bills paid before maturity.)----------------------------------No checking mark of any kind should be put on this slip by the sending Branch. ParticuLar Care should be taken to see that the total is written in plain round figures.

Acc't.

Figure 19 and the advice is then mailed direct to the latter, a carbon copy being retained for record. Immediately on receipt of the advice the total amount is debited in branch clearings against the name of the advising branch, and the items credited to their several destinations. The credit entry is thus offset and ticked off in due course at the head office. Some offices will, of course, require the use of a much larger advice slip than the form shown.

Two columns will be noticed in the advice. The first column is used for debits already created at the credited branch, which await the relative credits in "Cash items account."

The second column is used to advise all other credits such as collections, deposits, collaterals, trade bills paid out of date, and other similar items.

Cash items consist principally of sight items and matured trade bills, and these, on the receipt of the advice, are marked off as paid, and the first column of the advice credited to the account as a total.