How will the goods in transit for which billing has been done and not received as on year end date accounted for in the balance sheet???
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purchase accounting
Replies (3)
GOODS IN TRANSIT A/C DR............
TO CASH/CREDITORS A/C
THEN IF GOODS RECIEVED..............
PURCHASE A/C DR.......................
TO GOODS IN TRANSIT A/C
I dont agree with Tehsinkhan.. As if you do this your balance will not match with the creditor and the Cash cannot be credited in any way because there is no outflow of Cash if goods are in Transit.
So when bill is raised (Cash paid):
Purchase A/c Dr
To Creditor A/c (Cash A/c)
On the date of Balance Sheet just add the value of stock in your Closing Stock or show separately as Goods in Transit in both Trading A/c and Balance Sheet.
I dont agree with Tehsinkhan.. As if you do this your balance will not match with the creditor and the Cash cannot be credited in any way because there is no outflow of Cash if goods are in Transit.
So when bill is raised (Cash paid):
Purchase A/c Dr
To Creditor A/c (Cash A/c)
On the date of Balance Sheet just add the value of stock in your Closing Stock or show separately as Goods in Transit in both Trading A/c and Balance Sheet..
Agree with the said but there are cases when the bill is raised & sent to the purchaser prior to the deliver in that case there is a liability on u to pay & thus this would be the entry.
Goods In Transit A/c Dr
To Suppliers A/c Cr ( if the payment is not made)
or To Cash A/c Cr ( if the payment is made)
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