Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Cash and Inventory in transit
- This topic has 1 reply, 2 voices, and was last updated 6 years ago by P2-D2.
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- July 10, 2017 at 1:55 pm #395184
Sir for cash in transit y wud we need to debit payables? I mean wudnt it already be debitted by the seller when he gave the cheque or transferred the money?
Sir the adjustment for inventory in transit for Group SFP shudnt it be
Debit Inventory
And Credit Receivables
As the seller either the sub or parent wud have recorded the receivables amount and we wud need to remove that amount.? And if we increase payables we again wud need to debit that as it is an intra group transactionJuly 11, 2017 at 12:05 pm #395437Hi,
For cash in transit we will DR Bank and CR Receivable with the amount that is in transit. It is effectively the same as cash received from a credit customer. I think the debit you refer to is the removal of any remaining intra-group balance after dealing with the cash in transit.
For inventory in transit we are just dealing with the purchase of inventory on credit, so we will DR Inventory CR Payables. Once the payables has been adjusted for the inventory in transit we will then need to remove it as it is an intra-group balance, along with removing the receivable in the seller’s books.
Hope this clears it up for you. I think that this is more relevant to F7 though than to P2.
Thanks
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