Home Office and Branch Accounting Flashcards
Home Office and Branch Acctg
Explain Accounting for Agency
*Displays merchandise and takes customer orders, but NOT carry inventory to fulfill curtomers order
*Sales Agency does not maintain its own accounting books
*all of its transactions are recorded in home office books
*HO may set up account codes for its agency
Home Office and Branch Acctg
- Explain Accounting for Branch Operations
- Provide only 2 peculiar accounting procedures:
- *Not a separate legal entity, but separate business unit
*records its own transactions and prepares its own FS in a regular manner
2.
a. Recording transactions between HO and branch
b. Preparing combined FS
Home Office and Branch Acctg
Account Calssification of the ff?
1. Investment in Branch
2. Home Office
- Asset
- Equity
Home Office and Branch Acctg
Explain Shipment to, from, Allowance for Over Valuation (AOI)
Shipment to - at cost
AOI - mark up (also need to eliminate)
Shipment from - at billed price (Shpment to +AOI)
Home Office and Branch Acctg
Provide Entries for Branch and HO books the ff acctg for branch plant assets
- HO acquisition - Property carried in the branch books
- HO acquisition - Property carried in the HO books
- Branch acquisition - Property carried in the HO books
- Branch acquisition - Property carried in the branch books
- HO:
Dr. IIB
Cr. Cash
Branch:
Dr. Property
Cr. Home Office
2.
HO:
Dr. Property - BranchX
Cr. Cash
Branch: No Entry
- HO:
Dr. Property-BranchX
Cr. IIB
Branch:
Dr. HO
Cr. Cash
4.
HO: No entry
Branch:
Dr. Property
Cr. Cash
Home Office and Branch Acctg
Provide Entries for Branch and HO books for the ff transactions
- Transfer of Inventories - HO paid freight
- Ttansfer of Inventories - Branch paid freight
- Purchase of inventories by branch from outside parties
- HO:
Dr. IIB (including freight cost)
Cr. Shipment to
Cr. Cash
B:
Dr. Shipment from
Dr. Transpo In
Cr. HO
2.
HO:
Dr. IIB (inventory amt only)
Cr. Shipment to
B:
Dr. Shipment from
Dr. Transpo.In
Cr. HO
Cr. Cash
3.
HO: No entry
B:
Dr. Purchases
Dr. Transpo In
Cr. AP
Cr. Cash
Home Office and Branch Acctg
Provide Entries for HO and Branch - Remittance to HO
HO:
Dr. Cash
Cr. IIB
B:
Dr. HO
Cr. Cash
Home Office and Branch Acctg
Provide Entries for Branch and HO if barch make a total sales of 500k on acct
HO: No entry
B:
Dr. AR
Cr. Sales
Home Office and Branch Acctg
- Explain Allocation of expenses (expenses by 1.branch and 2.HO on behalf of branch)
- List of expenses that maybe allocated to the branch
- Provide Entries for Branch and HO books for the ff transactions:
a. Branch incurs salary exp of 100k. 1/4 remains unpaid
b. HO allocates 10k Utilities and 4k Advertising exp to branch
- Expenses incurred by branch are recorded in a rehular manner. But expenses incurred by HO on behalf of branch are recorded similar to investment
- *Cost of maintaining information systems
*cost of contracts
*depreciation exp under composite method
*other general overhead cost - A)
HO: No entry
B:
Dr. Salaries Exp 100k
Cr. Cash 75k
Cr. Salaries Payable 25k
B)
HO:
Dr. IIB
Cr. Expenses
B:
Dr. Expenses
Cr. HO
Home Office and Branch Acctg
Diskarte sa reconciliation, ilatag mo muna yung mga should be na entries
Home Office and Branch Acctg
Provide account need to eliminate in combined FS
Shipment to/from
IIB
HO
AOV
Home Office and Branch Acctg
Details on Allowance for Markup/Overvaluation
The HO may bill the branch for inventory shipments at prices ABOVE COST. The mark-up is initially recorded in an “Allowance” acct and recognized in P/L only when realized (when the inventory is sold to external parties).
Accordingly, the INDIVIDUAL PROFIT OF THE BRANCH Is not equak to true profit. The difference is realized mark up.
Home Office and Branch Acctg
Remember the treatment of
- “Shipment to” to HO COGS computation?
- Allowance for Mark Up
- Deducted to GAS like ending inventory
- Deduction to IIB sa FS
Home Office and Branch Acctg
Explain concept for freight and entries for Interbranch transfer of Merchandise
Scenario:
HO shipped to BX paid freight of 800. BX transfer to BY and paid 600 freight. If the inv had shipped directly from HO to BY, freight could have been 1000.
Procedure:
1. Normal entry from HO to BX
2. BX to BY, reverse nya lang lahat then charge paid freight sa HO (debit lahat sa HO)
3. Excess of 400 is expense sa HO
4. BASTA YUNG ENTRY SA BY:
Dr. Shipment from
Dr. Freight In 1K!
Cr. HO
Home Office and Branch Acctg
- Provide the detailed computation for allowance for overvaluation thru sales by branch to outsider during the period (ilatag mo yung magic table)
- Then pano pag combined Net Income? Ano gagamitin sa branch? Cost or Billed Price?
- Latag mo lang Cost, Billed Price, Markup cost (ITO IMPORTANTE, PAG MAY NAKITA KANG BALANCE NITO/ AOI SA HO, MATIC SA GAS NG MARKUP COST AGAD SYA-PLS REMEMBER)
Brancg BI (from HO)
+Current shipment From
=GAS
-Branch EI (from HO)
COGS
- Cost ang gagamitin. Or, pwede yung billed price basta add mo lang yung realozed AOI. Rationale is billed price kasi. Pag combined, laging at cost ang gagamitin.
