Hello sir/madam
I have a Problem please solve me.
If, I have shop of tea. I sell 500 tea per day. When anniversary coming for the shop I give 100tea for free of cost.
According to this situation where to I wrote it and what entry we write.
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Entry of account
Replies (4)
Quick Summary
To make an accounting entry for free of cost tea, debit the "Miscellaneous expenses" account and credit "Cash" for the purchase price of the material used.
Absolutely agree with Aakarsh sir on above guidance provided.
You should transfer the cost of the free items to an expense, you may debit Business Promotion expense and credit your purchases to the extent of your costing incurred on final product that will solve your issue.
You should transfer the cost of the free items to an expense, you may debit Business Promotion expense and credit your purchases to the extent of your costing incurred on final product that will solve your issue.
Advertisement A/c Dr
To Purchase A/c Cr
( Being Tea given free for business pramotion )
To Purchase A/c Cr
( Being Tea given free for business pramotion )
Practically there is no need to Account the expense of 100 tea on anniversary day. but it can be used as an example to understand the procedure of account .
Material used in sales promotion is already paid & located in your stock book.
But that particular material having not any outward voucher. so you have to pass an entry in stock book showing material used by self as sales promotion.
again pass an entry of material cost to sales promotion expense.
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