Adjustment

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May 23, 2015 at 3:46 pm #248191
ahmed02
Member
- Topics: 17
- Replies: 15
In oct2006 x sold some goods on sale or return terms $2500. Their cost to x was $1500.The transaction has been treated as a credit sale in x’s financial statement for the year ended 31st oct 2006. In nov2006 the customer accepted half of the goods and return other half in good condition.
The answer for this adjustment :
sales and recivables (2500)reduced.
closing inventory 1500 increased.
Why not the sale and recivales 1250 reduced and closing inventory 750 increased?
May 24, 2015 at 9:36 am #248305
John Moffat
Keymaster
- Topics: 57
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As at the date of the financial statements (31 Oct), the customer had not said whether or not he was accepting any of the goods.
Therefore at 31 October there had been no sale, and all of the goods were still part of their inventory.
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