HOBA Flashcards
Accounting for Agency
- I will make a journal entry if I receive an order. True or False?
False - not recorded unless fulfilled
Accounting for Agency
- What is the journal entry if HO give samples to Agency?
- if the samples are sold?
- Dr. Samples Inv // Cr. Merchandise Inv
- Dr. Advertising Exp // Cr. Samples Inv
Accounting for Agency
- always remember for depreciation !!
For depreciation → check if for month or for year
Investment in Branch (asset account in HO)
Home Office (capital account in branch)
Yes
What is the normal balance of
- Shipment to Branch
- Shipment from HO
- Credit (deduction to TGAS of HO)
- Debit (addition to TGAS of branch)
For Branch, how to compute
- Branch Ending Inventory
- Separate Net income
- billed price
- usual manner
For HO, how to compute
- Branch Inventory @ Cost
- Branch True Net income
- eliminate mark-up
- eliminate mark-up
For Combined, how to compute
- Combined Inventory
- Combined Net Income
- HO + Branch Inventory at Cost
- HO + Branch True NI
Journal Entry for Allowance for Overvaluation
- HO
- Branch
HO
- Dr. IIB (billed price) // Cr. STB (cost) Cr. AFOV
Branch
- Dr. SFHO // Cr. HO
For PPE
- who will credit the cash / AP
- who will debit PPE
- who will debit AD
- who will debit depreciation expense
Acquirer = Cr. Cash or AP
Recorder = Dr. PPE // Cr. AD
User = Dr. Dep’n Expense
Template for Correct COGS of Branch
The branch did not record yet a shipment in transit. With that, since TGAS is understated, COGS is overstated. True or False?
refer to notes
False - Shipment in Transit = add to both SFHO and EI = no effect in COGS
- Be careful with freight (it should have no mark-up)
Formula for Branch True Income
Branch Net Income + Overvaluation
If there’s an interbranch transfer of cash or inventory, what will be the treatment for it?
treat the transfer as if it went through the home office directly
excess freight → OPEX for Home Office
savings from freight → not recorded (prudence)
Yes
First transaction - from HO to Branch A
Second transaction - HO said “Branch A, please bring it to Branch B”
For branch B, what amount of freight should be recorded? Actual freight or should-be freight?
should-be freight
Home Office Debit Memo = Debit IIB
What will happen to HO account in Branch Books?
If HO has Debit Memo, it will be a Credit Memo for the Branch.
Credit HO
Results to an increase in both IIB and HO
Vice Versa
