HOME OFFICE &

BRANCH
ACCOUNTING
Home Office & Branch Accounting
 Sales Agency and Branch
Distinguished
 Sales Agency
Usually carries a line of samples or displays merchandise
but does not carry stocks of it.
Orders are taken from customers and sent to Home
Office. Then ships the merchandise directly to customers.
The receivable accounts are maintained in Home Office
which also performs the collection.
A working fund for sales agency expenses is provided and
replenished when exhausted.
No other cash is handled by the Sales Agency.
 Sales Agency and Branch
Distinguished
 Branch Office
Carries stocks of merchandise.
Makes the usual warranties with respect to quality.
Responsible for the collection of Accounts
Receivable.
Functions as an independent business unit.
Accounting System for Sales Agency

 Neither keeps a complete set of books nor uses a double

entry system of accounts.
 Records sales to customers and Lists Cash Payments
supported by vouchers.
 Imprest System is adopted for the working fund of the
sales agency.
 Accounting System for Branch
Operations
 Maintains separate accounting system from the home
office.
 Each maintains a full set of books with complete self-
balancing set of accounts.
 Each records its transactions with outside parties in its
own accounting system.
 **Both Home office and Branch record transactions with
one another. (Inter-office transactions)
 All accounts are combined for external reporting.
RECIPROCAL ACCOUNTS
PREPARATION OF RECONCILIATION
STATEMENT
 PROBLEM #1

Shipment to the branch are billed at cost. The December 31

inventory of the branch was P 255,500.00
What is the balance of the Investment in Branch Account on
December 15, 2013 on the home office books?
SOLUTION FOR #1
PROBLEM #2
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PROBLEM #3
EXPLANATION FOR #3
PROBLEM #4
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PROBLEM #5
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PROBLEM #6
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PROBLEM #7
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PROBLEM #9
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PROBLEM #15
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PROBLEM #16
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