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    Intercompany Journal Entries

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    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.