Df Accounting Presentation (1)

8/11/2019 Df Accounting Presentation (1)

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The list of new accounts created are as under.

28.100- Franchisee receivable (ENZEN)

28.101- Franchisee receivable (FEEDCO)28.102- Franchisee receivable (SEA SIDE)

28.103- Franchisee receivable (RIVER SIDE)

46.131-Franchisee payable (FEEDCO)

46.130-Franchisee payable (ENZEN)

46.132-Franchisee payable (SEA SIDE)46.133-Franchisee payable (RIVER SIDE)

26.300- Advance to Franchisee (ENZEN)

26.301- Advance to Franchisee (FEEDCO)

26.302- Advance to Franchisee (SEA SIDE)

26.303- Advance to Franchisee (RIVER SIDE)62.100-Memorandum Franchisee sale

62.990- Other revenue from BOT model

76.201-Distribution Franchisee sharing of BOT Model


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It is decided that as the Principal we shall follow the same old practice of accounting of

assessment/billing on consumers with the same account heads as under.

Before passing the assessment entry the division has to get the details of the

component wise revenue with respect to LT and HT consumers with proper

authentication by the authorized officials of the franchise.

23.101Sundry debtors for sale of Power-LT Dr

23.102Sundry debtors for sale of Power-HT Dr

23.201- Sundry debtors for electricity Duty Dr

23.701

Sundry debtors for recovery of cost of meter Dr23.705Sundry debtors for payment of monthly minimum fixed charges Dr

23.790Sundry debtors for other charges Dr

To

61.201- Revenue from sale of power-LT

61.202- Revenue from sale of power-HT61.301-Revenue from sale of power-Monthly Minimum fixed charges

61.610-Recovery of cost of meter

61.903-Miscellaneous charges from consumers-Reconnection fees

61.906-Miscellaneous charges from consumers- Service connection fees

61.990- Miscellaneous charges from consumers- Customer charges & others62.251-Overdrawal penalty


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When EC will be deposited in the divisional account by the DF same account head

23.100-Collections from sundry debtors (revenue) will be operated for making CCV.

For other collections deposited as per old practice account head 47.xxx /48.xxx shall

Be operated for making CCV.

But apart from above as there is a concept of Assured Revenue whichis the back bone of the DF operation ,the situation of shortfall/excess from the

Assured Revenue will happen and DF sharing on excess or other revenue from BOT

Model will come in due course.

To be very specific to our presentation we are taking examples from

KED, KHURDA and the name of the DF is FEEDCO. So our discussion shall be limited to

the following ledger accounts as under.

28.101- Franchisee receivable (FEEDCO)

46.131-Franchisee payable (FEEDCO)


62.100(Memorandum Franchisee sale)


76.201- Distribution Franchisee sharing of BOT Model


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Situation No-1- When CESU has to pay the Franchisee sharing.

IN THE BOOKS OF KED,KHURDA

(1)

Let the bill served on FEEDCO is Rs.12,00,00,000/- on the Basis of Input*RPU.28.101- Franchisee receivable (FEEDCO) Dr. 12,00,00,000/-

62.100-Memorandum Franchisee sale 12,00,00,000/-

(2)

Let the DF deposited EC at 3 number of times at divisional account the total

amount of which comes to Rs.12,20,00,000/-.

Three CCVs has to be passed taking account head 23.100 -Collections from sundrydebtors (revenue) as under as per old practice.

(a)

23.100 -Collections from sundry debtors (revenue) Rs.5,00,00,000/-

(b)


(c)


(3)

The division has incurred Rs.1,00,000/- in purchase of stationary and issued to DFfor spot billing.

First division has to pass the DCV taking account head 76.154-stationary a/c.

Then one JV will be passed debiting the Franchise receivable(FEEDCO) and crediting

stationary a/c as under.

28.101- Franchisee receivable (FEEDCO) Dr. 1,00,000/-76.154-stationary a/c. 1,00,000/-


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(4)

Let the DF sharing is 36% on excess of Assured Revenue i.e Rs.20,00,000/-.The

commission is calculated as under. Rs.20,00,000/-*36%=Rs.7,20,000/-

The net sharing payable after deducting Rs.1,00,000/- for stationery expensesincurred by the division.

When it was finalized at the month end that actual deposit is more than the assured

revenue as in the above case just reverse the entry at point-(1).The JV is as under.

(a) 62.100-Memorandum Franchisee sale Dr. 12,00,00,000/-

28.101- Franchisee receivable (FEEDCO) 12,00,00,000/-

Then Pass another JV for Sharing calculated for Rs.7,20,000/- as under.

(b) 76.201-Distribution Franchisee sharing of BOT Model Dr Rs.7,20,000/-

28.101- Franchisee receivable (FEEDCO) Rs.7,20,000/-

Lastly transfer the net amount payable of Rs.6,20,000/- after adjustment of the

stationary expenses incurred by the division to the46.131-Franchisee payable (FEEDCO)

The JV shall be as under.

(c ) 28.101- Franchisee receivable (FEEDCO) Dr. Rs.6,20,000/-

46.131-Franchisee payable (FEEDCO) Rs.6,20,000/-


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The net DF sharing of Rs.6,20,000/ is paid by Head Office and necessary ATD issued

from the HO to KED,Khurda.The necessary entries and ledger depiction shall be as

under.

23.100 -Collections from sundry debtors (revenue)

Particulars Amount Particulars Amount

23.101

23.102

23.201

23.70123.705

10,00,00,000

2,00,00,000

5,00,000

5,00,00010,00,000

24.301-Bank

24.301-Bank

24.301-Bank

5,00,00,000

4,00,00,000

3,20,00,000

Total 12,20,00,000 Total 12,20,00,000


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62.100(Memorandum

Franchisee sale

(For billing to the DFon the basis of

Monthly input*RPU)

76.154-Stationery a/c

46.131-Franchaisee

payable (FEEDCO)

12,00,00,000

1,00,000

6,20,000

62.100(Memorandum

Franchisee sale)

76.201 - DistributionFranchisee sharing of

BOT Model

12,00,00,000

7,20,000

Total 19,20,000 Total 19,20,000

62.100-Memorandum Franchisee sale


28.101- Franchisee

receivable (FEEDCO)

12,00,00,000 28.101 Franchisee

receivable (FEEDCO)

(For billing to the DF on

the basis of Monthly

input*RPU)

12,00,00,000


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Balance B/D 1,00,000 28.101 Franchisee

receivable (FEEDCO)

1,00,000

76.201- Distribution Franchisee sharing of BOT Model


28.101 Franchisee

receivable (FEEDCO)

7,20,000 Profit & Loss A/c 7,20,000

46.131-Franchaisee payable (FEEDCO) A/C


37.001-- Inter Unit -Other

Transaction/Adjustments-HO

6,20,000 28.101

Franchisee

receivable(FEEDCO)

6,20,000


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IN THE BOOKS OF HEAD OFFICE

(1)

When DF sharing is paid by HO,it has to pass DCV under account head 46.131-Franchaisee payable (FEEDCO) A/C.

(2)

When ATD is passed to the division JV passed

37.034-Inter Unit -Other Transaction/Adjustments-KED,Khurda Dr.

To

46.131-Franchaisee payable (FEEDCO) A/C.Ledger depiction in the books of Head Office shall be as under.

46.131-Franchaisee payable (FEEDCO) A/C


24.301-Bank

A/c

6,20,000 37.034-Inter Unit -Other

Transaction/Adjustments-KED,Khurda

6,20,000


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Situation No-2- When CESU has to receive the shortfall from the assured revenue from

the DF.

IN THE BOOKS OF KED,KHURDA

(1) Let the bill served on FEEDCO is Rs.12,00,00,000/- on the Basis of Input*RPU.

28.101- Franchisee receivable (FEEDCO) Dr. 12,00,00,000/-

62.100-Memorandum Franchisee sale 12,00,00,000/-

(2)Let the DF deposited EC at 3 number of times at divisional account the total amount

of which comes to Rs.11,20,00,000/-.

Three CCVs has to be passed taking account head 23.100 -Collections from sundry

debtors (revenue) as under as per old practice.

(a)


(b)


(c)


(3)

The division has incurred Rs.1,00,000/- in purchase of stationary and issued to DF

for spot billing.

First division has to pass the DCV taking account head 76.154-stationary a/c.

Then one JV will be passed debiting the Franchise receivable(FEEDCO) and crediting

stationary a/c as under.


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28.101- Franchisee receivable (FEEDCO) Dr. 1,00,000/-

76.154-stationary a/c. 1,00,000/-

In this case the DF has to pay us Rs.81,00,000(Rs.80,00,000 for short fall from assured

revenue of Rs.12,00,00,000 and Rs.1,00,000 for reimbursement of stationery).

(4) When it was finalized at the month end that actual deposit is less than the

assured revenue as in the above case just reverse the entry at point-(1) for the actual

amount collected and deposited.The JV is as under.62.100-Memorandum Franchisee sale Dr. 11,20,00,000/-

28.101- Franchisee receivable (FEEDCO) 11,20,00,000/-

Finally the total amount of Rs.81,00,000/ is paid by the DF at Head Office and

necessary ATC issued from the HO to KED,Khurda.The necessary entries and ledgerdepiction shall be as under.

(4) While getting ATC received from HO the division shall pass the JV as under.

37.001-Inter Unit -Other Transaction/Adjustments-HO Dr. Rs.81,00,000/-

28.101- Franchisee receivable (FEEDCO) Rs.81,00,000/-


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(5)

Finally Rs.80,00,000 will be treated as Other revenue from BOT model for the

division and the JV to be passed to transfer it to income is as under.

62.100-Memorandum Franchisee sale Dr. Rs.80,00,000/-

62.990- Other revenue from BOT model Rs.80,00,000/-

The ledger presentation of the above transactions are as under.23.100 -Collections from sundry debtors (revenue)


23.101

23.102

23.20123.701

23.705

9,00,00,000

2,00,00,000

5,00,0005,00,000

10,00,000

24.301-Bank

24.301-Bank

24.301-Bank

5,00,00,000

4,00,00,000

2,20,00,000

Total 11,20,00,000 Total 11,20,00,000



62.100(Memorandum

Franchisee sale(For billing to the DF on the

basis of Monthly input*RPU)


12,00,00,000

1,00,000

62.100(Memorandum

Franchisee sale)

37.001-Inter Unit -Other

Transaction/Adjustments-

HO

11,20,00,000

81,00,000


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Total 12,01,00,000 Total 12,01,00,000

62.100-Memorandum Franchisee sale


28.101- Franchisee

receivable

(FEEDCO)

62.990- Other

revenue from BOT

model

(Differential

amount)

11,20,00,000

80,00,000

28.101 Franchisee

receivable

(FEEDCO)

(For billing to the

DF on the basis of

Monthly

input*RPU)

12,00,00,000

Total 12,00,00,000 Total 12,00,00,000



Balance B/D 1,00,000 28.101 Franchisee

receivable (FEEDCO)

1,00,000


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Profit & Loss A/c 80,00,000 62.100- Memorandum

Franchise sale

80,00,000

IN THE BOOKS OF HEAD OFFICE(1)When DF paid to HO of Rs.81, 00,000 /, HO has to pass CCV under account head

28.101- Franchisee receivable (FEEDCO).

(2) When ATC is passed to the division JV passed .


To

37.034-Inter Unit -Other Transaction/Adjustments-KED,Khurda Dr.

Ledger depiction in the books of Head Office shall be as under.



37.034-Inter Unit -OtherTransaction/Adjustments-

KED,Khurda

81,00,000 24.301-BankA/c

81,00,000


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Accounting entries for TDS on payment to Franchisee and ATD/ATC procedure including

advance to Franchise.

Whenever the Franchisee has to be paid for its share on excess collection over assuredrevenue TDS has to be deducted on the Gross Amount of the Bill. Similarly DF shall

deduct TDS on the payment due to short fall in collection from assured revenue. The

payment to DF and receipt from DF is presently routed through the Head Office. After

payment to DF or receipt from DF, respective ATD/ATC has to be passed by the Head

Office to respective units. After getting the ATD/ATC unit will pass the necessary entry

in its books.Situation No-1- When CESU has to pay the Franchisee sharing.(Examples only for

understanding)

HO has to pass one JV for the TDS payable of Rs.1, 00,000/- out of Rs.19, 00,000/-

calculated after reimbursement of Rs.1, 00,000/- for expense incurred by CESU.

The calculation of the Net Payable may be as under.Gross Franchisee Share Rs.20,00,000/-

Less- Reimburshment of

Expenses incurred by CESU Rs.1,00,000/-

Less- TDS of the Franchisee

Share Rs.1,00,000/-


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Net Payable to DF Rs.18,00,000/-

HO shall pass two numbers of DCVs and Two JVs and one ATD for the above.

(a) JV for TDS in the books of HO as under.

46.131-Franchaisee payable (FEEDCO) A/C Dr Rs.1,00,000/-

To

46. xxx -TDS Rs.1,00,000/-

(Being TDS Payable of Rs.0.01 Crores on the gross amount of the Share of the

Franchisee of Rs.0.20 Crores)

(a) DCV may be passed using account Head 46.131-Franchisee payable (FEEDCO)

A/C for Rs.0.18 Crores .

(b)

Another DCV may be passed for deposit of TDS by using account head 46.xxx forRs.0.01 Crores.

(c)

Final JV may be passed for the ATD raised on KED,Khurda as under.

37.034-Inter Unit -Other Transaction/Adjust.-KED,KhurdaDrRs.0.19Crores.

To 46.131-Franchaisee payable (FEEDCO) A/C Rs.0.19 Crores

Entries to be passed in the books of (KED,Khurda).

The division has to receive the ATD and make the following JV in its books.

46.131-Franchaisee payable (FEEDCO) A/C Dr Rs.0.19 Crores

37.001- Inter Unit -Other Transaction/Adjustments-HO Dr Rs.0.19 Crores.


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12) As per the clause no-8.1.6 of the agreement with the DF provisional weekly

installment payment to the DF has been discussed. For the accounting treatment of

the same we may create new account heads as under.

26.300- Advance to Franchisee (ENZEN)


26.302- Advance to Franchisee (SEA SIDE)

26.303- Advance to Franchisee (RIVER SIDE)

The accounting entries for the advance and adjustment of the same against the

Franchisee Payable shall be as under.

Taking the same example as in Situation No-2 as above, Let the provisional/advance

paid to DF in one installment from the HO is Rs.0.02 Crores on behalf of KED,Khurda.

(a) DCV has to be passed by the HO under account head 26.301- Advance to

Franchisee (FEEDCO) for Rs.0.02 Crores. The TDS payment on the same and its

Accounting Treatment is the same as mentioned above.

Now the reconciliation for final payment to FEEDCO shown in the example as above

Is modified as under.

The calculation of the Net Payable may be as under.

Gross Franchisee Share Rs.0.20 Crores

Less- Reimburshment of


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Expenses incurred by CESU Rs.0.01 Crores

Less- TDS of the Franchisee

Share of Rs.0.20 Crores Rs.0.01 Crores

Less- Advance payment at HO Rs.0.02 Crores

Net Payable to DF Rs.0.16 Crores

The necessary entries for the above in the books of Ho shall be as under.

(a) JV for TDS in the books of HO as under.


To

46. xxx Rs.0.01 Crores

(Being TDS Payable of Rs.0.01 Crores on the gross amount of the Share of the

Franchisee of Rs.0.20 Crores)(b)

DCV may be passed under account Head 26.301- Advance to

Franchisee (FEEDCO) for Rs.0.02 Crores .

(c )Another DCV may be passed for deposit of TDS by using account head 46.xxx for

Rs.0.01 Crores.

(d ) DCV may be passed for final payment under account Head 46.131-Franchisee

payable (FEEDCO) A/C for Rs.0.16 Crores .


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(d) JV shall be passed transferring the advance to Franchise payable as under.

46.131-Franchisee payable (FEEDCO) A/C Dr. Rs.0.02 Crores .

To 26.301- Advance to Franchisee (FEEDCO) Rs.0.02 Crores

(e)

Final JV may be passed for the ATD raised on KED,Khurda as under.

37.034-Inter Unit -Other Transaction/Adjust.-KED,KhurdaDrRs.0.19Crores.

To 46.131-Franchaisee payable (FEEDCO) A/C Rs.0.19 Crores

Entries to be passed in the books of the division (KED,Khurda).

The division has to receive the ATD and in make the following JV in its books.


37.001- Inter Unit -Other Transaction/Adjustments-HO Dr Rs.0.19 Crores.

Situation No-2- When CESU has to receive the shortfall from the assured revenue from

the DF.(Examples only for understanding)


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In the books of Head Office

Similarly in case of receipts from the DF, HO will pass the appropriate entries taking the

account head 28.101- Franchisee receivable (FEEDCO) & Account head 27.425-Income

tax deducted at source-Other receipt. The ATC will be issued for the gross amount to thedivision.

Therefore Ho has to pass two numbers of JVs and one CCV and one ATC as under.

a)

When HO receive the short fall from the DF of Rs.79,00,000/- after deduction of say

Rs,2,00,000/ as TDS from the gross amount of Rs.81,00,000/-.

CCV shall be passed taking the Account head 28.101- Franchisee receivable (FEEDCO)

for Rs.79, 00,000/-

b)

For the TDS deducted by the DF on remittance of the short fall.JV has to be passed as

under.

27.425-Income tax deducted at source-Other receipt Dr. Rs,2,00,000/-28.101- Franchisee receivable (FEEDCO). Rs.2,00,000/-

c) At the time of passing the ATC in favour of KED,Khurda

JV will be passed as under.

28.101- Franchisee receivable (FEEDCO). Dr. Rs.81,00,000/-

37.034-Inter Unit -Other Transaction/Adjust.-KED,Khurda Rs.81,00,000/-


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In the books of KED,Khurda

a)

After getting the ATC from the HO khurda will pass the following JV.

37.001- Inter Unit -Other Transaction/Adjustments-HO Dr. Rs,81,00,000/-

28.101- Franchisee receivable (FEEDCO). Rs.81,00,000/-

Lastly some guidelines are given as under for month end reconciliation for data

sanitization with expected critical situations with appropriate accounting entries .

1)Any amount of revenue deposited by the DF in the divisional bank account during a

month, CCV has to be made by the division under account head 23.100.1)

Any amount of other collections deposited by the DF in the divisional bank account,

CCV will be made using the account code 47 & 48 as per the old practice.

2)

In usual manner 23.100 will be nullified by transferring it to respective consumer

account like LT, and HT at the month end.

3)

In Post Franchise scenario for the purpose of crediting the actual amount to theconsumer account and calculation of shortfall/deficit from the assured revenue proper

reconciliationhas to be carried out by the division along with the officials of DF at the

end of every month.

4)

The procedure/guidelines for such exercise may be as follows.


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a)

Separation of EC & Other than EC collection for calculation of shortfall/excess from

assured revenue.

b)

Bill revision amount credited to the consumer account shall not be treated as

revenue collected and kept separate from the calculation. The amount of bill

revision and category of consumers involved has to be disclosed by the DF to thedivision with proper authentication for accounting entry of the same at divisional

level.

c)

Similarly any cheque dishonored and debited to the consumer account will be

deducted from the entire collection by the DF of the relevant month. The amount of

cheque dishonored and category of consumers involved has to be disclosed by theDF to the division with proper authentication for accounting entry of the same at the

division.

d)

Any interest on security deposit credited to the consumer account will be treated as

deemed revenue for calculation of short fall or excess over assured revenue. The

amount of interest on security deposit and category of consumers involved has to bedisclosed by the DF to the division with proper authentication for accounting entry

of the same at the division.

e)

Any amount of security deposit adjusted against revenue and credited to the

consumer will be treated as deemed revenue for calculation of short fall or excess

over assured revenue. The amount of interest on security deposit adjusted against


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revenue and category of consumers involved has to be disclosed by the DF to the

division with proper authentication for accounting entry of the same at the division.

f)

Any departmental building of CESU which are billed but revenue not collected by the

DF will be treated as deemed revenue collected by DF and to be taken into

consideration of short fall or excess over assured revenue. The amount of the billingon different offices of the CESU has to be disclosed by the DF to the division with

proper authentication for accounting entry of the same at the division.

g)

It is to mention here that from Para-B to Para-G the accounting entry to be passed

will be as usual as per prevailing practice. The purpose of those accounting entries at

division is to equalize the sundry debtors in accounts with the sundry debtors of ITdata base in a uniform manner.

h)

Any expenditure by the division like stationery, vehicle or other reasonable

expenditure for which the DF would have to do it in the usual course of its business

has to be recovered from the amount payable to DF. A separate invoice has to be

raised by the division on the DF for recovery of the same. The respective accountingentry has to be passed which are depicted in subsequent Paras.

i)

For classification of revenue, other revenue, non cash item either being debited or

credited or any adjustment to consumer account described above will be

undertaken by the IT cell of CESU from the soft copy/data base of DF for all the


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postings undertaken by the DF during the month. IT cell of CESU may be directed to

take over the matter to finalize the month end reconciliation.

5)

Therefore during the reconciliation the following critical items may be segregated with

the help of IT.

a)

The actual amount of revenue realized in cash and deposited in the divisionalaccount.

b)

The actual amount of revenue realized in cash but not deposited in the divisional

account. In this peculiar situation we have to pass one entry debiting the Franchise

receivable A/C and crediting the 23.100 and subsequently 23.100 will be nullified

by transferring it to the respective consumer accounts as per old practice. Thedetail of entry has been mentioned in point no-9.

c)The actual amount of other collection realized in cash but not deposited in the

divisional account. Similar to the above In this peculiar situation we have to pass

one entry debiting the Franchise receivable A/C and crediting the

47.xxx/48.xxx.The detail of entry has been mentioned in point no-10.d)The actual amount of other collection realized in cash and deposited in the

divisional account.

e)

The actual amount of other collection realized but wrongly credited to EC of the

consumers.

f)

The other non cash adjustmentsaffected to the consumer account.


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g)

The adjusted revenue in form of non-cash arrived at the end of the monthly

reconciliation on the basis of which short fall or excess will be calculated.

h)

For the final determination of the above from the data base of the DF the help of the

IT cell of CESU is a must.

6)

Any amountof revenue realized in cash but not deposited in the divisional account?In this peculiar situation we have to pass one entry debiting the Franchise receivable

A/C and crediting the 23.100 as under. This can be known after the month end

reconciliation only.



28.102- Franchisee receivable (SEA SIDE)


To

23.100

7)

Anyof other collection realized in cash but not deposited in the divisional account?

Similar to the above in this peculiar situation we have to pass one entry debiting the

Franchisee receivable A/C and crediting the 47.xxx/48.xxx.


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28.102- Franchisee receivable (SEA SIDE)


To47. xxx

48. xxx

The above document is issued with the previous approval of competent authority,which will guide the accounting units where the DFs are in operation in addition to

the head office of CESU.

THE END

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Df Accounting Presentation (1)

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