For most of us, choosing to be fit is more a test of will than a one time decision. Being “fit” covers a change in our lifestyle much more than just embarking upon a new exercise or diet program. For me, the choice came about 15 years ago. I was abou
branch accountingFull description
CHAPTER I. HOME OFFICE AND BRANCH ACCOUNTING Accounting for Agency *For this transaction, it only maintains separate accounting system in the Home Office. 1. Receipt of revolving fund Cash – Agency Cash on hand
Home Office Cash 1. Home office initial investment for establishing a branch Investment in Branch Cash
xx
2.
2. Branch acquires equipment to be carried by the Branch.
Equipment Cash
No entry
3.
3. Subsequent depreciation
Depreciation Expense xx Accum. Dep – Equipment
xx
No entry
4.
xx
4. Branch acquires equipment to be carried by the Home office.
Home office Cash
Equipment - Branch Investment in Branch
5.
xx xx
xx Sales - Agency
Cost of Sales - Agency Inventory
xx
3. Collection by Home office of Agency Sales Cash on Hand A/R
xx xx
4. Disbursement from revolving fund
5. Replenishment of revolving fund - Agency
xx
xx xx
Depreciation Expense Home office
5. Subsequent depreciation
xx
xx
xx xx
Furniture Cash
7.
xx xx
Depreciation Expense Home office
6. Determine the profit and closing entries
7. Subsequent depreciation
Sales – Agency xx Cost of Sales – Agency xx Various expenses - Agency xx Income Summary – Agency xx
Investment in Branch xx Accum. Dep. – Equipment
xx
6. No entry
- Branch
xx
xx
6. Home office acquires furniture to be carried by Home office
xx xx
8. xx
8. Home office acquires furniture to be carried by Branch
Furniture Home office
Investment in Branch Cash
9.
9. Subsequent depreciation
xx
xx
Investment in Branch xx Accum. Dep. – Equipment
No entry
Various expenses Cash on Hand
xx
xx
2. Order sent by Agency to Home Office A/R
xx Home office
xx
xx xx
xx Depreciation Expense xx Accum. Dep – Equipment Home Office
xx
No entry 10. HO transfers inventory. Freight paid by HO
Accounting for Branch
Branch 1.
Investment in Branch Shipments to Branch Cash
xx xx xx
11. HO transfers inventory. Freight paid by Branch Investment in Branch Shipments to Branch
xx xx
Shipments from HO Freight-in Home Office Cash
xx xx
Profit xx *Individual profit are computed in billed price xx xx
18. To close the branch nominal account to income summary:
12. Home Office: 12. Purchase of inventory by the Branch from outsider. Branch paid the Freight. No entry
Purchases Freight-in Accounts Payable Cash
xx xx
No entry xx xx
13. 13. Sales on account of Branch
A/R
xx Sales
xx
No entry 14. 14. Collection of Branch
Cash
xx A/R
xx
Branch: Sales Inventory (end) Shipments from HO Purchases Freight-in Expenses Income Summary
xx xx xx xx xx xx xx
19. To close the branch profit in the reciprocal account
No entry 15. 15. Remittance of branch Cash
Home Office Cash
Home Office: xx xx
Investment in branch Income Summary
xx xx
xx Investment in branch
xx
16. Branch expenses in w/c ¼ remain unpaid No entry
16.
Branch:
Various Expenses Cash Accrued Expenses
xx xx xx
Income Summary Home Office
xx xx
20. Elimination Entries 17. 17. HO allocates expenses for Utilities and General expenses Investment in branch xx Utilities Expenses xx General Overhead Expense
Home Office Investment in branch Utilities Expenses General Overhead Expense Home Office
xx xx
To compute the individual profit of Branch (Home Office):
10. Shipments from HO Freight-in Home Office 11.
xx xx xx
xx
xx
xx
Branch
xx
Sales Cost of Goods Sold: Inventory, beg. xx Shipments from HO(to B) xx Purchases xx Freight-in xx TGAS xx Less: Inventory, end xx Gross Profit Less: Expenses
Shipments to Branch xx Shipments from HO To compute realized mark-up:
xx
Total mark-up xx Less: Unrealized mark-up (Inventory, end) xx Realized mark-up xx
xx To compute the true profit of Branch (Home Office):
xx xx xx
Sales Cost of Goods Sold: Inventory, beg. xx Shipments from HO(to B) xx Purchases xx Freight-in xx
xx
TGAS Less: Inventory, end Gross Profit Less: Expenses Profit *True profit is computed at cost
xx xx
True profit of Branch xx xx xx xx
xx
*In computing combined profit, a shipment from Home Office (to Branch) is eliminated as well as the unrealized mark-up. To compute combined profit:
Other way to compute True Profit: Individual Profit of Branch xx Realized mark-up xx
Individual Profit of Home Office Individual Profit of Branch xx Realized mark-up xx
xx
Combined Profit
xx
Or Individual Profit of Home Office True profit of the Branch Combined Profit
