Rectification entry CA foundation
Q4 of rectification chapter (vi) adjustment - 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. also , it is a prior period adjustment why is it that we debit inventory and not the profit and loss adjustment a/c for the full sales amount recorded in the books in the previous year ?
When you record sales, you would also reduce inventory. So last year Sales was shown 1000 higher Closing Inventory was shown 800 lesser Net impact on profit and loss is only 200
alright , understood . Thank you , sir