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Intercompany Journal Entries

I need help understanding how these work. If one division sells another division 50 pc of equipment and records postage and depreciation on the items, how does the receiving division record the entry? I don't think they would be concerned with postage and depreciation on the receiving end - just a straight receipt, correct?

For example:

shipping entry:

Item 1000 - 3000
postage 50
depreciation 650
rec co. 2300

receiving entry: ???

I think

shipping co 2300
item 1000 2300

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Solution Preview

Hi there,

When companies supply each other, it is generally determined that the receiving company will pay ALL costs relating to the purchase from the shipping company. In the case above, the receiving company ...

Solution Summary

This brief solution looks at the pricing of intercompany sales and the assigning of shipping costs between divisions.