Sales promotions

A/c entries 11353 views 2 replies

atul

accountant

29 Points Joined April 2017

Dear Sir/ Madam Please explain me following scenarios in briefly

1. Sales Promotions is direct expenses or indirect expenses?

2. We are a distributor and given gift a bike to my top selling retailer on approvel of manufacturer/supplier as a gift against salling target in perticuler periods and supplier (manufacturer) reverse me all amt under the head sales promotions so how can we complete all accounting entries?

3.We daily collects Coupons / Tokens from our dealers and send them to manufacturer at the month end, so please explein me accounting entries?

4.If we received direct coupons / tokens from end users so how we can made accounting entries?

5.if our goods purchase cost 170/kg & our margin is 10% per KG so our selling price is 187/kg but on approval of manucturer / supplier we give 30RS/KG discount on selling price, so what is our selling price in invoice beacause of this our sales reports shows loss status, please explain me in breafly?

6. we are arrage various type of meeting & programes in our territory for end users and for this we have heavy exp. per meeting so we claim our manufacturer and they reverse expences amount in sales promotion, so please explain all accounting entries?

Replies (2)

satish

teaching

2046 Points Joined February 2009

1. Sales promotion exp is indirect exp

2. gift to retailers.(on Purchase of gift and handed over to customer)

Sales promotion a/c Dr.

ToBank

When gift amount reimbursed from manufacturer

Bank Dr.

To Sales promotion a/c

3. Coupons dealing with dealers.

- on collection of coupons from dealers

Coupons a/c Dr 1000

To Dealers A/c 1000 (by this transaction 1000 will reduce from amount receivable)

- when sending coupons to manufacturer ( coupon money should adjust from amount payable to comapny)

Company A/c Dr 1000

To Coupon a/c 1000 ( No impact of coupons in our books)

4. When coupons received from retailers

- transaction is on credit (entries just like previous)

- transaction os on cash:

Coupaon a/c Dr 1000

To Cash 1000

when all coupons surrended to company - (same entry like amount of coupons adjust from amount payable).

5. Invoice price is187/-

coming to discount. if you know the discount info as on the date of sale, there is no certainity for collection of 30/- as on date of sale. so as per AS 9 revenue is to be recognised to the extent of certainity. i.e. 30/- should not be recognised.

other wise recognise 187/- as sale. then consider 30/- as cash discount.

6. when you have incurred exp

sale promotion exp a/c dr

To bank A/c

when it is reimbursed from company

Bank A/c dr.

To Salles promotion exp a/c

majority of the queries are simillar. but as a distributor, you are acting as mediator between company and dealers. so do not mess with the system. it is not exp to you. if you have exp then that amount is adjustable with amount payable to company.