Sales Agency Accounting

Gunawan Wibisono

Sales agencies

Part of the business that displays merchandise and

take customers 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)
Cash (-A)
Transfer of sample inventories
Sample inventory (+A)
Merchandise Inv./Purchase (-A)
Replenishment of fund
Expenses (E, -SE)
Cash (-A)
Adjustment to sample inventory
Advertisement expense (E,-SE)
Sample Inventory (-A)
3,000

5,000

5,000
9,000
9,000
4,400
4,400
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.

Branch Accounting
Gunawan Wibisono

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 establish a new
branch in Solo, by transferring cash Rp25 juta and
equipment Rp50 juta. The accounts: (000)
Home office
Branch Solo office
Cash
Equipment

75.000
25.000
50.000

Branch
Cash
Equipment
Home office

25.000
50.000
75.000

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
Shipment to Solo branch

10.000
10.000

Branch
Shipment from home
Home office

10.000
10.000

Exercises
PT KUNTILANAK created a new branch office in Klaten and here are the
transactions of the new branch:
Receive cash for creation of Klaten branch Rp20 juta
Purchased equipment in cash with 5 years useful life
Received merchandise of Rp16 juta @ home cost
Purchased merchandise from 3rd party for Rp4 juta in cash
Sold merchandise for Rp30 juta in cash
Return Rp1 juta of shipped merchandise to home office
Paid expenses:

Salaries
Utilities
Rent
Other

Rp6 juta
Rp1 juta
Rp3 juta
Rp2 juta

Remit cash to home office Rp15 juta

Salaries payable at year end Rp1 juta
Branch inventories: Rp1 juta from 3rd party and Rp5 juta from home office
Create the journal entries!