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Carriage inwards

RAVIKUMAR (STUDENT) (107 Points)

06 March 2013

What is the accounting treatment for carriage inwards. Suppose i buy three goods of inventory A B n C for 20, 30 and 40 . and the total delivery charge i paid is 10. how should it be recorded in purchases and how does it reflect in the P/L .Thank U

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4 Replies

kevin (articleship) (111 Points)
Replied 06 March 2013

Show it in trading a/c..debit side at 10..n inveries undr purchase

Abhisek Rungta (PRACTISING CHARTERED ACCOUNTANT) (234 Points)
Replied 06 March 2013

Carriage Inward is a part of my inventory cost group it under the Purchase Cost in Trading account. Entry :

Purchase A\C Dr 90

Carriage Inward A\C Dr 10

To Cash / Vendor 100

Rs.100 will be grouped under Purchase cost and will taken for inventory valuation

CMA S.K (Asst. Manager - Finance) (216 Points)
Replied 06 March 2013

Originally posted by : Abhisek Rungta
	Carriage Inward is a part of my inventory cost group it under the Purchase Cost in Trading account. Entry : Purchase A\C Dr 90 Carriage Inward A\C Dr 10 To Cash / Vendor 100 Rs.100 will be grouped under Purchase cost and will taken for inventory valuation

RAVIKUMAR (STUDENT) (107 Points)
Replied 11 March 2013

thanks for the reply Mr Sk and Abhishek, but i still have a doubt

for example we buy A 10 items @ 3 = 30 and B , 10 items @ 4 = 40 , lets assume the delivery charge is 10

so i should record

Purchase A 30

Purchase B 40

Delivery charge 10

TO Cash 80

Suppose i sell 5 items of A for 5 each, so the sales is 5 X 5 = 25, so i record

Cash 25

TO Sales A 25

Now at the end of month i take inventory count, and i will find 5 items of A , that is 5 X 3 =15 and 10 items of B , that is 10 X 4=40

So i think my entries will be

Cost of sales Item A 15

TO Purchase 15

and

Inventory A 15

Invetory B 40

TO Purchase 55

My question is what happens to the delivery charge of 10. Or should i distribute the delivery charge among the cost of items , because from my entries , i have Dr purchase of 80 and at end of month , i have cr purchase of only 70 . My question may seem a bit stupid and very basic, but i dont understand this concept , as im new to this field, pls help