Accounting treatment question

  • Creator
    Topic
  • #191546
    Marc
    Participant

    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 ..

Viewing 2 replies - 1 through 2 (of 2 total)
  • Author
    Replies
  • #642773
    mla1169
    Participant

    It doesn't matter what account you use because presumably the two transactions will just offset each other in the same period. Anyplace I've ever worked we would just use a miscellaneous account to flow it through.

    FAR- 77
    AUD -49, 71, 84
    REG -56,75!
    BEC -75

    Massachusetts CPA (non reporting) since 3/12.

    #642774
    Marc
    Participant

    Thanks for your reply @mla1169, You are right, the problem is that it currently is going through Revenue and Expenses.

    While this would be a wash at the end of any period, It will inflate revenues and expenses and may have an impact on some ratio's. (since in my case it is a material amount)…

    No signature needed.

    Passed And got my license too ..

Viewing 2 replies - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.