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cash and goods in transits

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › cash and goods in transits

  • This topic has 3 replies, 2 voices, and was last updated 10 years ago by MikeLittle.
Viewing 4 posts - 1 through 4 (of 4 total)
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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: 23334
    • ☆☆☆☆☆

    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: 23334
    • ☆☆☆☆☆

    Because closing inventory has increased. That means cost of sales has decreased leading to an increase in gross profit

    Ok?

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