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There is an pffer that on purchase

Others 216 views 8 replies
There is an offer that on purchase of 200 T-shirt, 50 T-shirt will be free.  200 T-Shirt purchased by Company @ 200 per unit for employees..
Replies (8)

You can allocate the loss on all other shirts and report no loss, or

By Debtors a/c 40,000

Sales a/c 40,000

Sometimes you can get tax relief on distributing sample goods I guess. Then finished inventory must be reduced from trading account. 

By Distribution expenses a/c 

To Inventory a/c

Here what ever method is used: Cost or NRV for 50 T-shirts

 

This tshirt is not for sample it is given to employees as a uniform for free

Free or offer doesnt make a difference if there is no tax incentive. Cost - Selling price of 250 unit can be either allocated to 200 uniforms or inventory written off. Both are promotions. 

Journal entries??

The same as above. But take guidance from managers because their company policy will be different. Due to the above treatment, Gross margin and Operating margins ratios will change.

Dr Uniform expenses 40000
Cr Supplier 40000

I guess this is a simple answer to uniform purchased for employees. Also, you need not worry about the accounting for the free 50

Fine if they have purchased it that is the right entry. So, we don’t have to pay additional tax reporting extra 50 free shirts. Txs.

Ok, and what is the journal entries of good purchase for sale and get some unit free?


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