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Hello Guys, I would love to get your opinion on this one, I know it looks lengthy so bear with me.. I tried to make it as simple as possible.
Company A wants to ship Goods from point 1 to Point 3 through point 2.
Company A uses Shipper B to Ship goods from Point 1 to 2.
Company A uses Shipper C to Ship goods from point 2 to 3.
Company A has a contract with Shipping company B to ship goods from point 1 to Point 2.
Company A has negotiated rates with Shipping Company C to ship goods from point 2 to point 3.
Company B Bills company A for shipping from point 1 – 3, receives the invoice for the move from point 2 to point 3 from shipping company C.. and Pays Shipper C using the rate sheet negotiated by Company A. (Company A coordinates the shipping between point 2 and point 3.
The question: What is the accounting treatment at Company B for the receipt and payment of shipping fees from point 2 to point 3.
I) Advance account (as some sort of liability maybe … but not unearned revenue) and the expense would offset this liability
II) Revenue and contra revenue account.
III) Revenue and expense
It would be absolutely awesome if you can refer to accounting guidance that tackles this too.
Thanks!
No signature needed.Passed And got my license too ..
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