1.
A Gas Company sends out its gas stoves to dealers on Sale or Return. All such transactions are, however, treated like
actual sales and are passed through the Day Book. Just before the end of the financial year, 100 stoves which cost
them 150 each, are sent to a dealer on sale or return
and are debited to his account at * 200 each out of which only
20 stoves are sold at 180 each.
Show Journal Entries to adjust these transactions for the purpose of Company's Profit and Loss Account and Balance Sheet.
Answers
Explanation:
1.Under sale or return agreement, revenue is recognised A at the time of delivery of goods B when the buyer signifies his approval but sale price has not be fixed C when the buyer signifies his approval and the sale price has been fixed 2. When the transaction are few, the seller, while sending the goods on sale or return basis treats them as A ordinary sale B no sale C profit 3. A Gas Company sends out its gas stoves to dealers on Sale or Return. All such transactions are, however, treated like actual sales and are passed through the Day Book. Just before the end of the financial
View complete question »1.Under sale or return agreement, revenue is recognised A at the time of delivery of goods B when the buyer signifies his approval but sale price has not be fixed C when the buyer signifies his approval and the sale price has been fixed 2. When the transaction are few, the seller, while sending the goods on sale or return basis treats them as A ordinary sale B no sale C profit 3. A Gas Company sends out its gas stoves to dealers on Sale or Return. All such transactions are, however, treated like actual sales and are passed through the Day Book. Just before the end of the financial year, 100 stoves which cost them Rs. 150 each, are sent to a dealer on sale or return and are debited to his account at Rs. 200 each out of which only 20 stoves are sold at Rs. 180 each. Show Journal Entries to adjust these transactions for the purpose of Companys Profit and Loss Account and Balance Sheet.