Question

Goods worth `1,000 were sent on sale or return basis to a customer and entered in the Sales Book.

At the close of the year, the customer still had the option to return the goods. The sale price was

25% above cost. Explain this adjustment​

Answer 1

Answer:

profit and loss A/C Dr.

inventory A/C Dr.

To customer A/c

Explanation:

journal entry for sale or return basis

If the approval is in pending process:

sales A/c Dr.

To customer A/c

given that:

sale price was 25% above cost

25% on cost means 20% on sales

20% on sales = 1000* 20/100

= 200

if sale is 200,then the remaining was in inventory is 800

so,profit and loss adjustment A/c dr. 200

inventory A/c dr. 800

To customer A/c 1000