Concept:Remittance in transit is cash or bank transfer sent by a branch to the head office but not yet received or recorded by the head office at the reconciliation date.
Explanation:A remittance from a branch to head office is not income or an expense.
It is simply an inter-office transfer of funds.
In the branch books, the branch debits the head office account and credits the bank/remittance account.
When the head office later receives the money, it will debit the bank account and credit the branch account.
These two entries offset each other because the head office and branch accounts are reciprocal accounts.
Therefore, while reconciling the branch and head office accounts, remittance in transit is treated as a contra entry.
Answer:B. Contra entry