Sale of goods on approval/ return basis

Should I explain entire sum or particular entry

Balachandar S

CA Inter

★ 59K+

29-Nov-22 08:39

2 and 3 entry please

Thread Starter

Anitha V K

CA Inter

★ 4K+

29-Nov-22 09:01

The entry when we give the goods in approval basis the entry is: trade receivable A/c. To. Sales A/c. But this entry is not needed here because, they are asking only the later entries.

Vijay K

CA Inter

★ 9K+

29-Nov-22 14:13

They have given that the approval is made after the closing date of accounts of financial year. So the entry at the closing date is : Sales A/c. Dr. xxx To trade receivevable xxx

Vijay K

CA Inter

★ 9K+

29-Nov-22 14:16

But the goods are with the customer and the approval is not yet declared. So we or showing those goods as inventories with customer as Inventory with customer. Dr. xxx To trading A/c. xxx

Vijay K

CA Inter

★ 9K+

29-Nov-22 14:18

On approval of the 75% of goods sent on approval basis. We have to pass the necessary entry. (i.e). Trade receivevable. Dr. xxx To sales A/c. xxx In this entry, the amount should be 1,12,500 which 75% on 1,50,000. Entry for balance worth goods where already done when we made the reverse entry at the closing date itself.

Vijay K

CA Inter

★ 9K+

29-Nov-22 14:22

On the 3rd entry whenever there is acceptance of good it it's not needed to pass entry so on acceptance of goods no entry will be passed and only for the remaining goods of 25% on cost because In question it is mentioned 75% of cost of goods are considered so 25% of goods on cost to be calculated and entered

Thread Starter

Anitha V K

CA Inter

★ 4K+

29-Nov-22 16:43

You are right sis. If the approval is made in the same financial year, what you have said takes place. But here it is not applicable because the approval is made in the next financial year. So previously we would reverse the entry made for the sale on approval basis on the last date of financial year. So after that we have to pass the entry for the goods approved by the customer. And not for the rejected or returned goods

Vijay K

CA Inter

★ 9K+

29-Nov-22 18:17

Okay I understood thanks for clarifying ð???

Thread Starter

Anitha V K

CA Inter

★ 4K+

29-Nov-22 22:16