accounts
This query is : Resolved
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/-
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/-
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
Regards, CA Shakuntala Chhangani
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