Query on accounting for tailoring business

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Tailoring is a Business Activity, But it includes both service and sales , then how can we draft trading and P& L Account for it, if it includes both sales and service.How can we segregate the expenses separately for sales and service. Thanks in advance
Replies (1)

It could be understood by this simple example.

We are in tailoring business and provide service of stiching clothes & sell cloth too.

Assume we have bought clothes @ Rs. 200/- per meter, and we sell this to customers at Rs. 250/- per meter being Rs. 50 as our margin (profit), And for stiching a Garment we charge Rs. 500/- as our service charge.

Customer 1 : Buys Cloth from us say 10 mtrs we charge him 250/- per meter amount Rs. 2500

Entry

Cash A/c   Dr.                           2500

To Revenue from Sales              2500

 

Customer 2 : Wants to get  3 garment stich from us had brought cloth with him we charged him Rs. 1500

Entry

Cash A/c Dr.                        1500

To Revenue from Services      1500

 

Customer 3 ; Wants to get 3 garment stich from us and he also want to buy cloth from us we charged him from garment Rs. 1500/- and for cloth assume 10 mtrs Rs. 2500/-

 

Entry

Cash A/c Dr.                                4000

To Revenue from Sales                 2500

To Revenue from Services             1500

 

HOPE your doubt is clear with this example


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