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ACCO 30013 Home Office, Branch and Agency

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31 views24 pages

ACCO 30013 Home Office, Branch and Agency

Uploaded by

Aegyo Ashie
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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POLYTECHNIC UNIVERSITY OF THE PHILIPPI

STO. TOMAS BRANCH

ACCO 30023
ACCOUNTING FOR
HOME OFFICE,
BRANCH AND
AGENCY
PUP OUS IODE
Learning Objectives
After successful completion of this module, you should be able to:
• Differentiate the operations of home office/branch and agency
• Journalize transactions of agency and home office/branch, including
interbranch transactions
• Prepare reconciliation statement of home office and branch accounts
• Determine net income of agency, home office/branch and consolidated
net income
PUP OUS IODE

Agency Branch
• Established to display • Carries out the same activities
merchandise and to take as performed by the home office
customer order. at different location
• Do not stock merchandise, • Stock merchandise from
only have samples to home office, or can acquire
merchandise to display. stocks from suppliers, make
• All entries are recorded in the sales and collect receivables,
books of the home office incur expense.
because agencies are not • Branches have their own
considered as a separate entity. books.
PUP OUS IODE
Accounting for Agency
Transactions Home Office Entries
Establishment of working Working fund – Agency xxx
fund Cash xxx
Shipment of samples Samples – Agency xxx
Shipments to Agency xxx
Receipt of orders from Accounts Receivables xxx
customers Sales – Agency xxx
Cost of shipment to Cost of Sales – Agency xxx
agency Shipments to Agency xxx
Replenishment of petty Expenses – Agency xxx
cash fund Cash xxx
PUP OUS IODE
Accounting for Agency
Transactions Home Office Entries
Adjustments of samples Expenses – Agency xxx
Samples - Agency xxx
Closing of revenue and Sales – Agency xxx
expenses Cost of Sales – Agency xxx
Expenses - Agency xxx
Agency Income xxx
Closing of agency income Agency Income xxx
to Retained Earnings xxx
Problem 5-1: Agency Transactions

On July 1, 2019, the Power Company of Manila establishes an


organization in Laguna to act as a sales agency The following assets
are sent to the agency on July 1:
PUP OUS IODE
A working fund to be operated under the imprest system P10,000
Samples from the merchandise stock
50,000
Advertising materials and literature
12,500

During July, the agency submits sales on account of P176,000 that are
approved by the home office; cost of merchandise shipped in filling
orders is P105,000. Home office disbursements chargeable to the
agency are as follows
Furniture and fixtures for agency
P24,000
Salaries and commissions
17,500
Rent
8,000

On July 31, the agency working fund is replenished. Paid expense


vouchers submitted by the agency are as follows:
Advertising expense
P3,250
Miscellaneous expense
6,000

The following information is used in adjusting the agency accounts on


July 31:
a. Agency samples will be useful until December 31, at that time it is
believed that they will have a salvage value of 40% of cost.
Problem 5-1: Agency Transactions

On July 1, 2019, the Power Company of Manila establishes an


organization in Laguna to act as a sales agency The following assets
are sent to the agency on July 1:
PUP OUS IODE
A working fund to be operated under the imprest system P10,000
Samples from the merchandise stock
50,000
Advertising materials and literature
12,500

During July, the agency submits sales on account of P176,000 that are
approved by the home office; cost of merchandise shipped in filling
orders is P105,000. Home office disbursements chargeable to the
agency are as follows
Furniture and fixtures for agency
P24,000
Salaries and commissions
17,500
Rent
8,000

On July 31, the agency working fund is replenished. Paid expense


vouchers submitted by the agency are as follows:
Advertising expense
P3,250
Miscellaneous expense
6,000

The following information is used in adjusting the agency accounts on


July 31:
a. Agency samples will be useful until December 31, at that time it is
believed that they will have a salvage value of 40% of cost.
Problem 5-1: Agency Transactions

On July 1, 2019, the Power Company of Manila establishes an


organization in Laguna to act as a sales agency The following assets
are sent to the agency on July 1:
PUP OUS IODE
A working fund to be operated under the imprest system P10,000
Samples from the merchandise stock
50,000
Advertising materials and literature
12,500

During July, the agency submits sales on account of P176,000 that are
approved by the home office; cost of merchandise shipped in filling
orders is P105,000. Home office disbursements chargeable to the
agency are as follows
Furniture and fixtures for agency
P24,000
Salaries and commissions
17,500
Rent
8,000

On July 31, the agency working fund is replenished. Paid expense


vouchers submitted by the agency are as follows:
Advertising expense
P3,250
Miscellaneous expense
6,000

The following information is used in adjusting the agency accounts on


July 31:
a. Agency samples will be useful until December 31, at that time it is
believed that they will have a salvage value of 40% of cost.
PUP OUS IODE
Accounting for Home Office
Home Office Entries Branch Entries
Transfer of Cash and/or Other Assets:
Investment in Branch xxx Cash / Other Assets xxx
Cash / Other Assets xxx Home Office Current xxx

Shipment of Inventory:
Investment in Branch xxx Shipment from Home Office xxx
Shipment to Branch xxx Home Office Current xxx
Allowance for Overvaluation xxx

If freight cost paid by the branch:


Investment in Branch xxx Freight-in xxx
Cash xxx Home Office Current xxx
PUP OUS IODE
Accounting for Home Office
Home Office Entries Branch Entries
Sale of Goods and Collection of Receivables by the Branch:
No entries. Accounts Receivable xxx
Sales xxx

Cash xxx
Accounts Receivable xxx
PUP OUS IODE
Accounting for Home Office
Home Office Entries Branch Entries
Home Office Collection of Branch Receivables:
Cash xxx Home Office Current xxx
Investment in Branch xxx Accounts Receivable xxx

Branch Remittance to Home Office:


Cash xxx Home Office Current xxx
Investment in Branch xxx Cash xxx
PUP OUS IODE
Accounting for Home Office
Home Office Entries Branch Entries
Expenses Incurred and Paid by Branch:
No entries. Expenses xxx
Cash xxx

Expenses Incurred by Branch but Paid by Home Office:


Investment in Branch xxx Expenses xxx
Cash xxx Home Office Current xxx

Expenses Allocated by Home Office to Branch:


Investment in Branch xxx Expenses xxx
Expense xxx Home Office Current xxx
PUP OUS IODE
Accounting for Home Office
Home Office Entries Branch Entries
Fixed Assets Carried in the Branch Books:
Investment in Branch xxx Fixed Assets (PPE) xxx
Cash xxx Home Office xxx

Depreciation Expense xxx


Accumulated Depreciation xxx

Who will record the fixed assets: Branch


Who will pay: Home Office
Who will record the depreciation: Branch who uses the fixed assets
Who will record the accumulated depreciation: Branch who booked the PPE
PUP OUS IODE
Accounting for Home Office
Home Office Entries Branch Entries
Fixed Assets Carried in the Home Office Books:
Fixed Assets xxx No entries.
Cash xxx

Investment in Branch xxx Depreciation Expense xxx


Accumulated Depreciation xxx Home Office Current xxx

Who will record the fixed assets: Home Office


Who will pay: Home Office
Who will record the depreciation: Branch who uses the fixed assets
Who will record the accumulated depreciation: Home Office who booked the PPE
PUP OUS IODE
Accounting for Home Office
Home Office Entries Branch Entries
Branch Net Income:
Investment in Branch xxx Income Summary xxx
Branch Net Income xxx Home Office Current xxx

Allowance for Overvaluation xxx


Branch Net Income xxx
PUP OUS IODE
References
• Accounting for Special Transactions, A
Comprehensive Approach, by Gloria Rante, Ma.
Delia Liz, Elsa Ruado and Jonald Binaluyo,
2020 Edition.

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