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Query on accounting for tailoring business

suneel bathula (Article Student) (24 Points)

05 March 2016

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

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Saliq Ansari (CA_Final Student) (885 Points)
Replied 05 March 2016

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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