How to record GIT in books of accounts??
Situation:- We received bill of Rs. 100 on 29/03/09, But as on 31/03/09 we received goods worth Rs.50 only balance goods were in transist,below are the two option of recording GIT so which is the appropriate method?
Alternative 1:- To record Debit [Purchase Rs.50, GIT(Under Current Assets) Rs.50] and credit party Rs.100
Alternative 2:- To record Debit [Purchase Rs.100] and Credit Supplier By Rs.100, and to reduce GIT from Closing Stock.
since u have received bill for Rs.100..the correct accounting treatment is Alternative 1...the goods in transit are part of closing stock
yes, u should for option 1
It depends on fact and circumstances of the case. If risk and reward pertaining to goods in transit is transferred then entry should be made as per alternative 1, otherwise alternative 2.
agree with hemal
I think, GIT has to be accounted under Purchases in profit and loss account.
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