Sales Agency Accounting

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Sales agencies
 Part of the business that displays merchandise and take
customer’s order.
 Sales agencies DO NOT:
 Stock merchandises
 Pass on customer credit
Accounting for sales agencies
 Accounting for sales agencies are similar to petty cash
system, only cash receipt and disbursement are usually
managed by sales agencies, while for other related
transactions are managed by the central corporate
system.
Accounting for sales agencies
 Creation of agencies
Agency working capital (+A) 5,000
Cash (-A) 5,000
 Transfer of sample inventories
Sample inventory (+A) 9,000
Merchandise Inv./Purchase (-A) 9,000
 Replenishment of fund
Expenses (E, -SE) 4,400
Cash (-A) 4,400
 Adjustment to sample inventory
Advertisement expense (E,-SE) 3,000
Sample Inventory (-A) 3,000
Accounting for sales agencies
Other transactions related to agencies:
 Purchase of fixed assets to agencies
Land- Yogyakarta agency (+A) 2,000
Building – Yogyakarta agency (+A) 18,000
Cash (-A) 20,000
 Sales order
Account receivable (+A) 12,000
Sales-Yogyakarta agency (R, +SE) 12,000
COGS-Yogyakarta agency (E,-SE) 6,000
Merchandise inventory (-A) 6,000
 Asset depreciation
Depreciation expense-Y agency (E,-SE) 3,000
Acc. Dep. Exp.-Y agency (-A) 3,000
Exercises
On Jan 1st, Wajik, Co. set up a new sale agency in Bantul, with a
working capital of Rp25 million. The account is replenished on
a yearly basis. Cost to advertising is Rp500.000per month.
Utilities are Rp250.000 per month. Salaries are Rp750.000 per
month. Sales from the agency total Rp300 million, with half of
it paid in cash. Rent are paid monthly of Rp500.000 per month
until a new office is set.
On July 2nd, the corporation purchases land and building for the
agency, Rp20 million and Rp10 million, respectively.
The sample inventory transferred had a cost of Rp10 million and
at the end of the year, its fair value is Rp5million.
Please make the appropriate journals!
Branch Accounting

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Branch Accounting
 Accounting for home – branch offices are similar to those
on a consolidation. This means that only inter home –
branch office transactions are reconciled, other individual
home and branch office transactions are recorded in the
usual accounting procedures.
New branch creation
 New branches are treated as individual related entities, so in every
new branch creation the home establish an investment account that
will contra the equity of the branch.
 i.e., Home office of PT KUNTILANAK established a new branch in
Solo, by transferring cash Rp25 million, equipment Rp50 million, and
building Rp100 million. The accounts: (000)
 Home office
Branch – Solo office 75.000
Cash 25.000
Equipment 50.000
Building 100.000
 Branch
Cash 25.000
Equipment 50.000
Building 100.000
Home office 75.000
Branch – Home Office Accounts
 Both accounts are reciprocal accounts, they contradict
each other. While branch account represents investment,
the home office account represents equity.
Inter home – office transaction
 Merchandise sale is one typical transaction between
home – branch offices. The sale is recognized as
shipments.
 i.e., Home office of PT KUNTILANAK transferred goods
at cost to Solo branch Rp10 juta. The accounts: (000)
 Home office
Branch – Solo office 10.000
Shipment to Solo branch 10.000

 Branch
Shipment from home 10.000
Home office 10.000
Branch Accounting - illustration
Shipment in Excess of Cost
Shipment in excess of cost
Shipment in excess of cost
Shipment at Billing Price
Freight Charges
Freight Charges: No Excessive Charges
Freight Charges: No Excessive Charges
Expense Allocations
Reconciliation
Illustrations