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Can the consignee sells the goods on credit basis and approval or return basis.
Answers (12)
Thread Starter
Vijay KOkay, so what if the goods are returned in the approval or return basis sales
When goods are sent on a â??sale or returnâ?? or on â??approvalâ?? basis, these goods are not treated as sales unless they are approved (purchased) by the customer. However if at the inventory count date, these goods are held by its customers without approval then they are taken as unsold goods. In that case, they are included in the sellerâ??s inventory valuation but not in the figure for sales.
The ownership of the goods is passed only when the buyer gives his approval or if the goods are not returned within that specified period . When the seller (even consignee) sends goods casually on Sale or Return : If the transactions are few, the seller treats the transactions as an ordinary sale. If the goods are returned a reverse entry is passed to cancel the previous transaction.
Journal Entries When goods are sent Sundry Debtors A/c Dr. (Invoice Price or Selling Price) To Sales A/c When goods are returned or rejected Sales A/c Dr. (Invoice Price or Selling Price) To Sundry Debtors A/c When goods are accepted ---------No Entry ( When goods are sent on Sale or Return basis the normal entry for sale has been already recorded , and hence on goods accepted by the Customers again no entry is required to be passed . )
When unapproved goods are existing on the last day of the year I) Sales A/c Dr. To Sundry Debtors A/c (Invoice Price or Selling Price) (When the above unapproved goods are returned in future no entry will be passed to record the same. )II) Should be included in Closing stock and valued at Cost or Market Value whichever is lower Stock with Customers on sale or Return A/C.-----Dr. To Trading A/C .
When such transactions are a regular feature of our business and account for a significant volume, â?¦ then it is better to keep some memorandum records (it is not part of books of account) so as to have complete knowledge and control of goods lying with customers. A memorandum sales on approval register can be maintained showing details of goods sent, goods sent, goods sold, closing balance and pass entries at regular periods accordingly
Thread Starter
Vijay KI am a science student in 12th and I don't even know anything about accounting and learning from the basics with the help of this class. So I will write the exam only at may 2022. Is there be any issues with that?
Please follow the videos, then go through the notes and solve all illustrations (how ever difficult or confusing) yourself and We are sure you can do it