ACCOUNTING FOR AGENCY, HOME OFFICE
AND BRANCH
OUTLINE:
1. Agency transactions
2. Transactions in the books of home office and branch
• Shipments of merchandise at cost and above cost
• Shipments of merchandise with excess freight
• Accounting for branch fixed assets
Carried in the home office
Carried in the branch
3. Reconciliation of reciprocal accounts
4. Preparation of individual and combined financial statements
Agency Transactions:
Agency :
• established to display merchandise and to take customer’s orders
• given only samples for display
• do not stock merchandise to fill their orders and to pass on clients’ credit
• Transactions are merged with the home office however it can track their
transactions separately only when the home office elects to account them
separately
• All entries are recorded in the books of the home office
• Not considered as a separate unit from the home office
• Not required to have a complete accounting system
• Keep records only of cash receipts and disbursements
Branch
• Stock mdse from HO or acquired from outside parties
• Make sale to own customers and pass on client’s credit
• Collect receivables, incur expenses, and perform other functions normally
• Have their own book of accounts
• Prepare own financial statements which is submitted in HO for consolidation