Jan. 8 Goods distributed as free samples
3. Journalise the following transactions in the books of Sonia :
Mar. 1 Goods worth + 3,000 withdrawn by Sonia for her personal use.
Mar. 2 Goods donated to a charitable hospital + 5,000.
Mar 3 Goods destroyed by fire + 12,000. Insurance company admitted the claim
10.000.
Mar. 4 Goods stolen by a thief + 7,000. Goods were un-insured.
Mar. 5 Goods distributed as free samples + 1,500.
Mar. 6 Goods of the selling price of 3,000 are further withdrawn by Sonia for
personal use. 20% of cost is added to fix up the selling price.
Mar. 7 Goods costing + 20,000 sent to an agent for sale purpose.
Hints :
When goods are sent to an agent, consignment account is debited.
Goods withdrawn by proprietor are recorded at cost which is calculated as
3.000 x 100
= *2,500.
120
Answers
When goods are purchased or brought into the business purchase account is debited. Similarly when goods go out of the business for any reason other than sales, purchases account is credited.
The journal for goods distributed as free samples is -
Advertisement Expense A/c Dr. 10000
To Purchases A/c 10000
Here sales account is wrongly credited instead of purchases account, so the incorrect entry has to be cancelled and actual entry has to be passed. Here Advertisement Expense account is rightly debited, so no changes will be made to it.
Since sales account is wrongly credited, it will be debited to cancel the entry and purchases account will be credited which was omitted. The rectification entry is -
Sales A/c Dr 10000
To Purchases A/c 10000
hope it helps you
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