Treatment of goods not received till last day of fy?

Pass an entry..........Goods in Transit A/c Dr. To Y Ltd. .............show Goods in transit A/c under current assets..............

@ Nitesh: Is it correct to pass that entry, since we do not know whether they have despatched full order value or partial and also we dont have invoice to support this entry?

At the same time, anothe entry should hav been passed for advance paid to Vendor

Y Ltd A/c Dr.

       To bank A/c

@ Sumit: Entry for payment of Advance has been properly passed in Books of Account as you have mentioned. The main question is relating to treatment in 31st March B/S.

show the y ltd as an advance paid to creditor in current assets

Check Challan or Excise / Tax Invoice.

If despatch date is 31st March, then show goods in transit in stock and pass entry for provision for purchases

Purchases A/c Dr to Supplier's a/c and write narration as provision for goods in transit.

Dear Nitin Singhal

If invoice is dated on or before 31st March & goods actually have been received after 31st of March then treat it goods in transit accordingly

but if invoice is dated after 31st March then treat it just advance to party

Surendra

yes u can show these goods not yet received byu as Goods in transit 

Hello Nitin, pass the entries as follows on 31st march in the X Ltd's books.

Goods in Transit A/c ..... Dr.

    To Y Ltd A/c

According to this entry, in the balance sheet, at Liabilities side, under Current liablities, balance of Y Ltd will be shown (i.e Total payable amount-advance paid) and Goods in transit will be shown in the assets side under Current assets.

And in the P&L A/c, Goods in transit will be shown in Debit side and accordingly credit side.

But As per Tally software, you have to pass two entry for this, one gived the effect to P&L  and other gives the effect to Balance Sheet.

So

1. Goods in Transit A/c (Purchase Head)....Dr

       To Y Ltd A/c  (Sundry Creditors Head)

2. Goods in Transit (Current assets head)...Dr.

     To Goods in Transit A/c (Purchase Head)

The above entry is only gives the effect to Tally software. But you have to show the accordingly entry as abvoe as manually.

Stock account entries are not passed in financial accounts. Stock figure is external to financial accounts unless it is 'Integrated Cost and Financial System'.

Dear Nithin,

Before passing the entry in the books you should check the following.

When the goods are in transit on 31st March, who is bearing the risk & rewards of the goods ? (I mean if the goods are lost/destroyed who will bear the loss)

If the Seller is bearing the loss, then need not to pass any entries in the books of the buyer.

If buyer is bearing the loss, then you have pass the entry like our friends suggested.

X Ltd’s Books

On 29^th March,2012

Goods in Transit A/c Dr   20

            To Bank A/c               20

(Being Payment made in advance for goods not received)

Assumptions: 1.Advance given of Rs.20 Lakhs, Goods Worth Rs.100 Lakhs

                       2.Risk & Rewards are transferred on 29^th March from Seller to Buyer.

On 4^th April

Purchase A/c Dr           100

            To Goods in Transit A/c           20

            To Bank A/c                            80

Profit & Loss A/c Dr    100

            To Purchase A/c 100