accounts

Save Share

This query is : Resolved

Rinky jhanwar (Querist)

21 March 2010 Accounting of free sample of goods distribute????

co is making a invoice for free sample but the value is showing nill.
for example
purchasr 100 units 10000 /-
sale 50 units 5000/-
free samples 10 units -
closing stock 40 units 4000/-
sale no profit no loss
gross loss 1000/-

shakuntala chhangani

shakuntala chhangani (Expert)

21 March 2010 Hi Rinky, the above treatment is not right. when the goods are distributed as free samples the cost of such goods is credited to trading A/c or purchase a/c and the same is debited to P/L A/c. In this case ur trading A/c will be debited by Purchases 100 units @ Rs. 10,000 and credited by Sales 50 units @ Rs. 5,000, goods distributed as free samples 10 units @ Rs. 1,000 (Cost) and closing stock 40 units @ Rs. 4,000 so there will be no profit no loss. Remember, we earn profit only on sales in trading A/c. If the sales is made at cost only then there is no question of profit.
Regards, CA Shakuntala Chhangani

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now