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ACCOUNTING TRAETMENT OF FREE GOODS

Kumar Gaurav (Going...to be C.A soon...) (1624 Points)

09 October 2007

hi all,

i have one query about the treatment of stock which we are given as scheme to our customers and shows the value of free goods on invoice . so is there any entry required for that in books.

thks

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11 Replies

Rachana Gadage (Account Executive) (136 Points)
Replied 09 October 2007

yes you have to pass entry for reduction in stock, sales promotion expenses i.e. cost of goods

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Harish Kumar (Salaried) (50 Points)
Replied 09 October 2007

kindly send me the entry harish123sharma @ yahoo.com

(Guest)

Sales Promotion - Free Samples Dr. Stock in Hand Cr. Show seprate line item for Sales Promotion - Free Samples in your trading account Further this will be subject to Fringe Benefit Tax

Joseph Alexander (CA Final Student) (163 Points)
Replied 15 October 2007

Free Samples A/c Dr.
To Sales A/c

or

Free Samples A/c Dr.
To Branch Stock A/c
(THIS ENTRY IS ONLY IN THE CASE OF BRANCH ACCOUNTS)

Gurmet Siingh (Chartered Accountant) (413 Points)
Replied 22 October 2007

It can be Sales promotion Dr. To Sales A/c or Sales promotion Dr To Stock A/c

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Suresh Goel (servuce) (335 Points)
Replied 22 October 2007

that entry will be only reflected in stock register and will be refllected in quantitative informations given in as per schedule vi in Balance sheet. That total quantity of goods sold plus goods given free of cost. so that figures could be reconcialed with stock register.

Vijay K. Agrawal (Service) (608 Points)
Replied 26 October 2007

yes for accounting purpose and accouting stock take re. 1 value

Suresh Goel (servuce) (335 Points)
Replied 03 November 2007

I think, there is should be no financial entry in the books of accounts. Free sample given is to be treated like to quantity discount. It should be reflected in quantitative statement of tax audit report and in schedule VI informations.

V.Sakthivelan (AM) (40 Points)
Replied 11 January 2014

Hi,

The entry has to be

Sales Promotion / Gift A/c Debit

To Purchases Credit

Accounting treatement by Mr. Joseph Alexander, will infleate Sales figure. But actually there is no sales involvement.

Thanks, V. Sakthivelan

1 Like

NOUFAL (ACCOUNTANT) (762 Points)
Replied 12 January 2014

Not only this matter, but also every matter and transaction unless it have no value, the entries must be pass. For the correct closing stock this entry must be needed.

entry is

Sales Promotion expense A/c

To Sales A.c