MATERI PRAKTIKUM AKUNTANSI KEUANGAN LANJUTAN FATA 2016

LAB 1
HOME OFFICE, BRANCH OFFICE

 Definition of Branch Office

Branch Offices are a part of entities. Branch Offices are treated separately in terms of
accounting system, but not in terms of legal business entities.

 The Difference between Branch Office and Sales Agencies

Aspects Sales Agencies Branches
Sales to outside Sales are controlled by Branches can do their own sales
entities controlling entities to outside entities
Merchandise Sales inventory does not account Branches account for their own
inventory for its inventories, but they can inventories
display them
Sales Requirement Controlling Entities Branches doesn’t have sales
requirement from controlling
entities
Operating Expenses Controlled by Controlling Branches account for their own
Entities, treatment similar to expenses
petty cash
Accounting System Petty cash They have their own accounting
system

 Transactions between Home Office and Branch Office

Home Office

Outside
Entities
Branch Office 2 Branch Office 1

(Intercompany Profit Transaction) (Arms-length transaction)

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 Combining Home Office and Branch Office Financial Statement

1. Eliminate Reciprocal Accounts (example: Home Office, Branch Office)
2. Combine non-reciprocal accounts

 Examples
 Creation of new branch
Chuchu Company creates a new branch in Singapore by transferring $10,000 in cash and an
equipment valued at $7,000.

Home Office (in $) Branch Office (in $)

Singapore Branch 17,000 Cash 10,000
Cash 10,000 Equipment 7,000
Equipment 7,000 Home Office 17,000

 Remitted $2,000 to Home Office.

Cash 2,000 Home Office 2,000

Singapore Branch 2,000 Cash 2,000

 Singapore Branch transfers $3,000 cash to Batam Branch.

Home Office Singapore Branch Batam Branch
Batam Branch 3,000 HO 3,000 Cash 3,000
Singapore 3,000 Cash 3,000 HO 3,000
Branch

 Merchandise Shipment
Chuchu Company transfers Merchandise to Singapore Branch at $20,000 its cost.
Singapore Branch 20,000 Shipment from HO 20,000
Shipment to BO 20,000 Home Office 20,000

 Excess Cost (At Cost and At Billing Price)

Chuchu Company transfers merchandise to Singapore Branch, $20,000 in cost excluding a
markup of 25% using at cost.

Singapore Branch 25,000 Shipment from HO 25,000

Shipment to BO 20,000 Home Office 25,000
Loading in Branch 5,000

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Meanwhile, if Chuchu Company uses at billing price:

Singapore Branch 25,000 Shipment from HO 25,000

Shipment to BO 25,000 Home Office 25,000

(at the end of the period)

Shipment to BO 5,000 Shipment to a cost basis
Loading in Branch 5,000

Loading in Branch 3,000 To adjust for branch profit, assuming

Branch profit 3,000 $3,000 profit was recognized

 Freight Cost
Chuchu paid $500 for $25,000 of merchandise shipped to Singapore Branch.
Singapore Branch 25,500 Shipment from HO 25,000
Shipment to BO 25,000 Freight In 500
Cash 500 Home Office 25,500

 Return
Singapore Branch returned 50% of the merchandise from Chuchu, Singapore Branch paid
$300 for the shipment.
Shipment to BO 12,500 Home Office 13,050
Loss on excess freight 550 Shipment from HO 12,500
Singapore Branch 13,050 Cash 300
Freight In 250

 Expense Allocation
Singapore Branch pays $5,000 for advertising expense that relates equally to Branch and
Home Office.
Advertising Expense 2,500 Advertising Expense 2,500
Singapore Branch 2,500 Home Office 2,500
Cash 5,000

 Additional Information

Home Office Branch Office

Sales 150,000 94,000
Ending Inventory 10,000 6,000 50% of branch ending inventory was
Purchase 30,000 21,000 acquired from outside entities
Prepare adjusting and closing entries!

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Home Office (in $) Branch Office (in $)

Singapore Branch 18,750 Sales 94,000
Branch Profit 18,750 Ending Inventory 6,000
Shipment from HO 57,500
Loading in Branch 4,400* Purchase 21,000
Branch Profit 4,400 Freight In 250
Advertising Expense 2,500
Home Office 18,750

* = 5,000 – (3,000 – 3,000/125%)

= 5,000 – (3,000 – 2,400)
= 5,000 – 600
= 4,400

Ending Inventory from HO (After mark up of 25%) = 3.000 (125% dari cost)
Nilai Ending Inventory dari HO (Menurut Cost dari HO) = 2.400 (100% cost)
Nilai Loading in Branch untuk 3.000 ending inventory = 600
Loading Inventory yang sudah Realize = 4.400 (5.000 – 4.400)

ANA – HESTY – SANDRA – SHINDI FATA 2016