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Goods with the selling price Rs. 1,250 were distributed as frec samples. We sell goods
cost plus 25% on cost.
Journal entry
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Answer:
Free samples account dr. 1000
To purchase account. 1000
we take profit 25%on cost
let cost be 100
profit. 25(100×25%)
sale =. 125
profit on sale is 25/125
sale is 1250
so profit is 1250×25/125=250
cost is = 1250-250=1000
When we distributed goods as free samples then cost price is consider not sale price
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