CA_Final Student
885 Points
Joined January 2010
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