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- This topic has 3 replies, 2 voices, and was last updated 8 years ago by
John Moffat.
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- October 1, 2016 at 5:33 pm #342182
Hi John,
the following transactions are as below:
Sandy Hampton has the following transactions for her company in June:4 June Sells £6,000 goods on credit to R. Fish.
£4,500 goods on credit to R. Leake.
£3,500 goods for cash to R. Shah
11 June R. Shah buys on credit £2,000 of goods from Sandy Hampton.
15 June Sandy Hampton receives bank interest of £25for the 4th of June
for the two first transactions we don’t have cash account involve here, however we have accounts receivables (Assets created through business), inventory and sales a/c.with amount of £(6000,4500).
my question here about inventory( it goes down and will goes with Credit)we need to combine into Journal entry as below:
account receivables £6000
Sales £6000Cost of Goods sold £6000
Inventory £6000
is that correct recordings?
for the 11 June
Accounts receivables £2000
sales £2000
what about Inventory here is it involve in this transaction?October 1, 2016 at 6:39 pm #342188When you sell goods on credit, the double entry is Dr Receivables Cr Sales
When you buy goods on credit, the double entry is Dr Purchases Cr Payables.
We only make an entry for inventory at the end of the period.
All of this is covered (with examples) in my lectures on double entry bookkeeping and on Inventory.
October 1, 2016 at 9:09 pm #342195Hi John,
But on 11 June R. Shah buys on credit £2,000 of goods from Sandy Hampton, and we are
talking here about Sandy not R. Shah. Is that account should be (Asset: account
receivables) instead of Purchases?
another question:when you purchase goods on credit/ cash, is the account involve here is:
Assets a/c :Inventory purchases?
thanks for help, your lectures completely helpful.
Regards,
MohammedOctober 2, 2016 at 6:47 am #342199As I wrote before, when you sell goods on credit (as Sandy sold to R Shah), the entry is to Dr Receivables and Cr Sales.
When you buy goods on credit, you Dr Purchases and Cr Payables.
If you buy for cash, then you Dr Purchases and Cr Cash.As I explain in my lectures on Inventory, you only account for inventory and the end of the accounting period.
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