Journal entry

no it is not a correct treatment..."distibuted as free sample" is a business connotation ..it is done for promotional purposes and should be classified as advertisemnet/promotional expenditure.

hence purchase a/c or stock a/c should be credited and adv expenses should be debited

No it's not a correct treatment because you are distributing goods as free sample and for this you have debit your Advertisement or Business Promotion Expenses and credit your Purchase or Stock A/c, not Drwaings A/c. Drawings A/c is a Capital A/c and you can use it when Proprieter takes away the goods from business but remeber that goods are not for free sample.

And when you are distributing goods as free sample than it doesn't matter that who takes that goods Proprieter or other public, you are just doing your advertisement or Promotion.

no it is not a correct treatment..."distibuted as free sample" is a business connotation ..it is done for promotional purposes and should be classified as advertisemnet/promotional expenditure.   hence purchase a/c or stock a/c should be credited and adv expenses should be debited 

 

 I agree  Pooja Agarwal's  replay.

 

I Agree with Pooja

Agree with pooja... Advertisement exps. a/c Dr. To Purchase a/c But i want to ask what is stock a/c.....in my view no stock account are open..bec it doesnt comes in tb. bal of c/s is come from stock register or valuation which ever is less......only opening stockledger account is open at start of the year and that caome same in trading account......

If goods are distributed as free sample in connection of business then it will be treted as reduction in purchases  rather then Drawings but if goods are withdrawl by owner for personal use then it will be treted as Drawings 

If goods are distributed as free sample in connection of business then it will be treted as reduction in purchases  rather then Drawings but if goods are withdrawl by owner for personal use then it will be treted as Drawings 

Originally posted by : CA Tarachand kumawat
	If goods are distributed as free sample in connection of business then it will be treted as reduction in purchases  rather then Drawings but if goods are withdrawl by owner for personal use then it will be treted as Drawings

I think in both situation:

purchase will reduce: by crediting purchase account

entry will be as follow:

1.Drawings/Free sample account Dr.

  To purchase account

2. Capital Account Dr.

    To drawings

  or

P&l Account Dr.

To free sample account

Mr.JAIN

In my view, If you distibute free sample from purchased goods, you will credit purchase a/c.

Or, if you done some promotional activities for purchased goods(raw material to next stage), you will credit the stock a/c, here purchased goods value is increased.  

Originally posted by : Umavalli
	Mr.JAIN In my view, If you distibute free sample from purchased goods, you will credit purchase a/c. Or, if you done some promotional activities for purchased goods(raw material to next stage), you will credit the stock a/c, here purchased goods value is increased.

I think u r talking about costing records....but we are disscussing about financial/main books of accounts....in my opinion there is no entry is gothrough from stock account.....the simple treatment is to reduce purchase..