Transactions Home Office Branch

Establishment of a Branch Investment in Branch XX Asset XX

Asset XX Home Office Current XX

Merchandise Inventory Transactions

1) Merchandise Shipments to Investment in Branch XX Shipment from home office XX
Branch at Cost Shipment to branch XX Freight-in XX
Cash (for freight paid) XX Home Office Current XX

2) Merchandise Shipments to Investment in Branch (billed price) XX Shipment from home office (cost) XX
Branch at Price in Excess of Cost Shipment to branch (cost) XX Home Office Current XX
Allowance for overvaluation of
XX
branch inventory

3) Return by Branch of Shipment to branch XX Home Office Current XX

Merchandise to Home Office Investment in Branch XX Shipment from home office XX

Accounting for Property, Plant and Equipment (or other asset acquisition)
1) Branch assets are recorded in Investment in Branch XX PPE XX
Branch's books; Home office Cash XX Home Office Current XX
purchases PPE for Branch's use

2) Branch assets are recorded in PPE XX No entry

HO's books; Home office purchases Cash XX
PPE for Branch's use

3) Branch assets are recorded in No entry PPE XX

branch's books; Branch purchases Cash XX
PPE for Branch's use

4) Branch assets are recorded in PPE XX Home Office Current XX

branch's books; Branch purchases Investment in Branch XX Cash XX
PPE for both HO & branch use

Accounting for Expenses

1) Expense is incurred by branch Investment in Branch XX Expense XX
but paid by HO / incurred by HO Expense XX Home Office Current XX
on behalf of the branch / allocated
by HO to branch

2) Expense is incurred by HO but Expense XX Home Office Current XX

paid by branch / assumed by Investment in Branch XX Expense XX
branch on behalf of the HO /

Collections of Receivables
1) Branch's receivable is collected Cash XX Home Office Current XX
by HO Investment in Branch XX Receivables XX

2) HO's receivable is collected by Investment in Branch XX Cash XX

branch Receivables XX Home Office Current XX

Payment of Payables
1) Branch's payable is paid by HO Investment in Branch XX Payable XX
Cash XX Home Office Current XX

2) HO's payable is paid by branch Payable XX Home Office Current XX

Investment in Branch XX Cash XX

Cash Remittances
1) Branch remits to HO Cash XX Home Office Current XX
Investment in Branch XX Cash XX

Recognition of Branch Income or Loss

Investment in Branch XX Income Summary XX
Branch Income XX Home Office Current XX