sale on approval basis

When goods is sold on approval and return basis, the sale is recognised when it is accepted by customer or expiry of specified period if customer unable to reject the goods

Customer a/c -dr, TO Sales a/c , if goods accepted , no further entry is required,

if goods rejected or waiting for approval , the above entry is reversed , an goods waiting for approval is treated as goods lying with customer.

If goods sent on approval a/c is credited, the another entry is required when good approved by the buyer ,

Goods sent on approval basis-  Dr., To sales A/c

In the Books of Buyer, entry will be

Purchases A/c-dr

To Creditors a/c

customer ac.- -- -  - -- - -  -- -  dr. 

to goods sent on approval basis

when goods r approved

goods sent on approval basisac - -- - -- - -dr.

   to sales ac.

goods sent on approval basis will be shown under the head closing stock at the year end

Originally posted by : future ca
	customer ac.- -- -  - -- - -  -- -  dr.  to goods sent on approval basis when goods r approved goods sent on approval basisac - -- - -- - -dr.    to sales ac.

Agree to this

but in the material it is given other way .... it isgiven   customers a/c dr to sales a/c

customer a/c---dr

           to sales a/c

is direct entry

Hi dear friends, very few days are left for exams. so read the modules properly. U will find that there are three methods of recording goods on approval method. the above question is based on last method "When the business sends goods numerously on sale or return basis". 

under this method, two memorandum books are opened - Sale or return day book and sale or return ledger. ledger contains accounts of individual customers and sale or return total account (i.e. goods sent on approval account).

 when the goods are sold on approval basis individual customers account is debited and total account is credited with total sale on approval for the period.

hence the above entry in institute's cd is correct.

Regards, CA Shakuntala Chhangani

https://www.cashiksha.com/Material/CPT/Quick%20Revision%20Notes/Accounts/Lecture%2015.%20Sale%20of%20Goods%20on%20Approval.pdf