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cash and goods in transits

This topic has 3 replies, 2 voices, and was last updated 10 years ago by MikeLittle.

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November 27, 2014 at 12:33 pm #213797
bilal
Member
- Topics: 12
- Replies: 10
what is the accounting treat withh full explanations of cash and goods in transits ?
November 27, 2014 at 4:05 pm #213869
MikeLittle
Keymaster
- Topics: 27
- Replies: 23204
Dr cash Cr intra-company receivables
Dr purchases Cr intra-company payables
Dr Inventory on the balance sheet Cr Cost of sales in PorL
These entries are adjusted for in the records of the company that will receive the goods / cash
Ok?
November 27, 2014 at 4:15 pm #213874
bilal
Member
- Topics: 12
- Replies: 10
ok but why we will credit cost of sales ?
November 27, 2014 at 4:21 pm #213880
MikeLittle
Keymaster
- Topics: 27
- Replies: 23204
Because closing inventory has increased. That means cost of sales has decreased leading to an increase in gross profit
Ok?
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