What is the accounting treatment for carriage inwards. Suppose i buy three goods of inventory A B n C for 20, 30 and 40 . and the total delivery charge i paid is 10. how should it be recorded in purchases and how does it reflect in the P/L .Thank U
RAVIKUMAR (STUDENT) (107 Points)
06 March 2013What is the accounting treatment for carriage inwards. Suppose i buy three goods of inventory A B n C for 20, 30 and 40 . and the total delivery charge i paid is 10. how should it be recorded in purchases and how does it reflect in the P/L .Thank U
kevin
(articleship)
(111 Points)
Replied 06 March 2013
Abhisek Rungta
(PRACTISING CHARTERED ACCOUNTANT)
(234 Points)
Replied 06 March 2013
Carriage Inward is a part of my inventory cost group it under the Purchase Cost in Trading account. Entry :
Purchase A\C Dr 90
Carriage Inward A\C Dr 10
To Cash / Vendor 100
Rs.100 will be grouped under Purchase cost and will taken for inventory valuation
CMA S.K
(Asst. Manager - Finance)
(216 Points)
Replied 06 March 2013
Originally posted by : Abhisek Rungta | ||
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Carriage Inward is a part of my inventory cost group it under the Purchase Cost in Trading account. Entry : Purchase A\C Dr 90 Carriage Inward A\C Dr 10 To Cash / Vendor 100 Rs.100 will be grouped under Purchase cost and will taken for inventory valuation |
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RAVIKUMAR
(STUDENT)
(107 Points)
Replied 11 March 2013
thanks for the reply Mr Sk and Abhishek, but i still have a doubt
for example we buy A 10 items @ 3 = 30 and B , 10 items @ 4 = 40 , lets assume the delivery charge is 10
so i should record
Purchase A 30
Purchase B 40
Delivery charge 10
TO Cash 80
Suppose i sell 5 items of A for 5 each, so the sales is 5 X 5 = 25, so i record
Cash 25
TO Sales A 25
Now at the end of month i take inventory count, and i will find 5 items of A , that is 5 X 3 =15 and 10 items of B , that is 10 X 4=40
So i think my entries will be
Cost of sales Item A 15
TO Purchase 15
and
Inventory A 15
Invetory B 40
TO Purchase 55
My question is what happens to the delivery charge of 10. Or should i distribute the delivery charge among the cost of items , because from my entries , i have Dr purchase of 80 and at end of month , i have cr purchase of only 70 . My question may seem a bit stupid and very basic, but i dont understand this concept , as im new to this field, pls help
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