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  • 3.10.2021 Consultation

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    Nicole
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    The document shows a freight transaction between Manila and QC branches. Manila initially received 6,500 freight which was then partially sold to QC for 3,800. Manila must derecognize 50% of the original freight amounting to 1,300 and recognize the new freight received from QC. QC paid 3,800 cash but the freight amount transferred was only 1,900, resulting in a 1,900 loss for QC.

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    The document shows a freight transaction between Manila and QC branches. Manila initially received 6,500 freight which was then partially sold to QC for 3,800. Manila must derecognize 50% of the original freight amounting to 1,300 and recognize the new freight received from QC. QC paid 3,800 cash but the freight amount transferred was only 1,900, resulting in a 1,900 loss for QC.

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    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    6 views8 pages

    3.10.2021 Consultation

    Uploaded by

    Nicole
    The document shows a freight transaction between Manila and QC branches. Manila initially received 6,500 freight which was then partially sold to QC for 3,800. Manila must derecognize 50% of the original freight amounting to 1,300 and recognize the new freight received from QC. QC paid 3,800 cash but the freight amount transferred was only 1,900, resulting in a 1,900 loss for QC.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    of 8

    HO Manila

    Initial Freight-in 6,500.00


    Cash 6,500.00

    Interbranch Investment - QC 1,900.00 HO 3,800.00


    Loss 1,900.00 Freight-in 1,300.00
    Investment - Manila 3,800.00 Cash 2,500.00
    Freight-in is debited by the receiving party
    Cash is credited by the party paying

    Initial freight 6,500.00


    Sold portion - 3,900.00
    Remaining 2,600.00
    % transferred 50%
    Freight 1,300.00 Should be derecognized by Manila

    Step 1: Derecognize old freight (original receiving)


    Step 2: Recognize new freight (new receiving)
    Step 3: Credit cash

    QC
    Original freight 1,300.00
    Cash paid 2,500.00
    Total paid 3,800.00
    Freight-in 1,900.00 Should be - 1,900.00
    HO 1,900.00 Excess payment 1,900.00 Loss
    derecognized by Manila
    HO books Branch books
    1st bullet Cash 800.00 HO 800.00
    IIB 800.00 AR 800.00

    Cash HO Net
    IIB Net Sales discount (contra sales)
    AR

    PPE - Branch 1,200.00 HO 1,200.00


    IIB 1,200.00 Cash 1,200.00

    HO books Branch books


    PPE - Branch 1,200.00 HO 1,200.00
    IIB 1,200.00 Cash 1,200.00

    IIB 200.00 Dep 200.00


    Acc. Dep - Branch 200.00 HO 200.00
    Investment (Dr.) HO (Cr.)
    Unadjusted 49,600.00 44,000.00
    1st - 800.00
    2nd 3,200.00
    3rd - 1,200.00
    4th - 1,500.00
    5th - 500.00
    46,400.00 46,400.00

    PPE 1,200.00
    Cash 1,200.00

    Purchase of PPE by branch (carried by HO)


    PPE 1,200.00 Who will debit? HO carries
    Cash 1,200.00 Who will credit? Branch paid

    Dep 200.00 Who will debit? Branch used


    Acc. Dep 200.00 Who will credit? Whoever carries the cost - HO
    Debit memo - issuer debited the reciprocal account
    Credit memo - issuer credited the reciprocal account

    Branch issues a credit memo, home office is not yet aware

    Branch credit the reciprocal account = the branch increased the reciprocal account
    Adjustment: HO should increase the reciprocal account

    IIB HO - current
    CM of branch XX

    HO issues a credit memo, branch is not yet aware

    HO credited the reciprocal account = the HO deducted the reciprocal

    IIB HO-current
    CM of HO (XX)
    Example:
    HO issues a credit memo, collection from customer of the branch

    AR, gross 10,000.00


    Sales discount - 200.00
    Net collection 9,800.00

    Basic accounting entry


    Cash 9,800.00 Who will debit? HO
    Sales discount 200.00 Who will debit? Branch (kasi branch recognized the sale)
    AR 10,000.00 Who will credit? Branch (kasi AR ni branch)

    HO Branch
    Cash 9,800.00 Sales discount 200.00
    IIB 9,800.00 HO 9,800.00
    AR
    Sino unang nakaalam ng collection? HO knows of the collection kasi sa kanya napunta yung cash
    Since HO unang nakaalam, siya magsend ng memo
    Since HO credited the reciprocal account, HO sends a credit memo
    gnized the sale)

    Branch

    10,000.00

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