Atharv Sankliya (1354 Points)
28 October 2021
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 28 October 2021
You can allocate the loss on all other shirts and report no loss, or
By Debtors a/c 40,000
Sales a/c 40,000
Sometimes you can get tax relief on distributing sample goods I guess. Then finished inventory must be reduced from trading account.
By Distribution expenses a/c
To Inventory a/c
Here what ever method is used: Cost or NRV for 50 T-shirts
Atharv Sankliya
(1354 Points)
Replied 28 October 2021
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 28 October 2021
Free or offer doesnt make a difference if there is no tax incentive. Cost - Selling price of 250 unit can be either allocated to 200 uniforms or inventory written off. Both are promotions.
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 28 October 2021
The same as above. But take guidance from managers because their company policy will be different. Due to the above treatment, Gross margin and Operating margins ratios will change.
CA Raj Doshi
(Practising CA)
(8924 Points)
Replied 29 October 2021
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 29 October 2021
Fine if they have purchased it that is the right entry. So, we don’t have to pay additional tax reporting extra 50 free shirts. Txs.
Atharv Sankliya
(1354 Points)
Replied 29 October 2021
CAclubindia
