Question

Sold goods to mahavir on credit

Answer 1

Answer:

As per Indian standard, Goods sold on credit are called credit sale, In a credit sale, you have to raise the invoice in  the party's name, and then goods are exchanged.

Explanation:

Take for example,

In your books of account ,your credit sales have to be recorded in a journal as

Mahavir account Debit          Rs.x                       (First Stage)

  To Sales book account Credit      Rs.x

(Being goods sold on credit to Mahavir against the bill )

When Mahavir makes payment of goods , then again you will have to record the entry  once again in the  journal as :

Cashbook account  Debit                Rs.x          (Second Stage)

To Mahavir account Credit            Rs.x

(Being amount received from Mahavir against the bill)

(Or you can write straight away:      If you have understood the concept.

Cashbook account Debit    Rs.x

To Sales account Credit   Rs.x)

(Being amount received from sales)

Writing narration after every journal entry is a good practice and helps you a lot later period.