Question

distributed goods from stock as free samples to value of Rs 1200 aa part of a advertisement​

Answer 1

Advertisement account Dr. 1200

To purchase account 1200

(Being goods distributed as free sample)

Explanation:

• Companies often gives free samples of their products as an advertisement strategy. This is one of the way of marketing the product.

• In the books of account advertisement has been treated as an expense for the business and when expense increases we write it on the the debit side.

• And free samples are being distributed from the stock of the company, so we write off the purchase and that's why we created the purchase account.

journal entry for this transaction would be:

Advertisement account Dr. 1200

• To purchase account 1200

(Being goods distributed as free sample)