Question

Goods goes out for sample is debited to account

Answer 1

Goods goes out for sample is debited to which account?

Answer: Advertisement A/c.

Goods distributed as free samples:- Distribution of goods as free samples is an advertisement.

It is simply the value of goods distributed by the firm as free sample as an advertisement.

Advertisement A/c is debited and as goods goes out of the business, the Purchases A/c is credited.

[The amount of goods that is distributed as free sample is debited to Profit and Loss account, under Advertisement.]

The journal entry for this is:

i) Advertisement A/c Dr.

To Goods distributed as a free sample A/c

[Being goods distributed as a free sample transferred Advertisement A/c.]

ii) Goods distributed as free sample A/c Dr.

To Trading/Purchases A/c

[Being goods distributed as a free sample transfered to trading A/c.]