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Goods Sent on Approval Basis

If the goods are sent on approval basis, they should not be treated as actual sales till they are approved by the customers. When goods were sold, we have passed the entry for actual sales. Therefore, at the end of the year, if the goods are still lying with the customers for which approval has not yet received, the following entries will be passed:

 

Date

Particulars

L.F.

Debit ( )

Credit (₹ )

 

Sales A/c (Sales Price)          Dr.

 

Xxx

 

To Sundry Debtors A/c

 

 

xxx

 

Stock with customer’s A/c (Cost Price)          Dr.

 

Xxx

 

To Trading A/c

 

 

xxx

 

Example: Goods costing ₹ 10,000 is sent to a customer on sale on approval basis for ₹ 12,000. The entry for such unapproved sale shall be:

 

Date

Particulars

L.F.

Debit ( )

Credit ( )

 

Sales Account (Sales price)        Dr.

 

12,000

 

To Sundry Debtors A/c

 

 

12,000

 

Stock with customer’s A/c (Cost Price)        Dr

 

10,000

 

To Trading A/c

 

 

10,000


Note: We will learn in detail about this concept in unit 4 of chapter 7, “Accounting for special transactions”





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