Question

Journal entry for
Goods costing Rs 40,000 sold at profit of 20% for cash

Answer 1

Money A/C dr
To sale A/C

the place money =48000
And sales= 48000

U will add 8000 revenue to the items

Answer 2

Cash A/c…..Dr      48000

To Sales A/c                      40000

To P&l A/c                         8000

Explanation:

Here in this case as cash is being increased, we will debit it as it's a current asset. According to the modern accounting rule, when assets are increased, they should be debited. Sales are credit natured objects so we credit the actual sale amount being 40000.

As the goods are sold for a 20% higher cost, which is Rs.4000 the P&L account must be credited as incomes should be credited. The firm gets Rs.4000 as additional income therefore making it a direct income so we credit it.

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