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Hi Sir,
Purchase goods for resale on credit $300 .
(Original cost $600)Wat is the double entry??
Thank youI don’t know what you mean by original cost of $600. If they buy them for $300 then the cost to them is $300 and the entry is debit purchases, credit payables with 300.
You really need to watch our free lectures – I cannot type out all the lectures here 🙂
Sry for disturb Sir. I have study ur lectures video already repeat n repeat . But I dun understand is the question. ?
The question is, purchase goods for resales on credit $300. at the bottom show that,
goods Original cost of $600
Answer
Assets =liability + capital
Asset +300
Liability +300
Asset -600
Capital -600I dun understand Y liability +300 and not capital +300.for my understanding, $300 is DR trade receivable (increase asset ) Cr Sales ( increase Profit).for $-600 Cr stock decrease (decrease in inventory ) Assest minus .Dr Profit ( so profit will be decrease)capital minus. Am I rite? ?
I am sorry but I don’t understand what you are asking at all.
You asked for the double entry – not the accounting equation.
Your question only referred to buying goods for 300. You only make a profit (or loss) when you come to sell the goods and you made no mention of selling them in your question.
Sry Sir. Ok.. how about this type of question the accounting equation is?
Purchase of goods for resale on credit $300 .Good originally cost $600 ?
But it still make no sense!
When you buy the goods at a cost of 300 then assets increase by 300 and liabilities increase by 300 – profit is not affected at all.
It is only when you come to sell the goods that there is a profit or loss.
Can U help on this.
Year Ended 31 December 2012. Draft profit was 38000.
1. Cost Amount of inventory as at 31 December 2012 is 16800. This include item Which cost 1400 but had been Damages. On 2nd January 2013 Amy spent 300 to Repair the Damages and sold them for 700. Whats the Correct Amount to be recorded to inventory?
2. During the Year Spend 500 on repairs to boiler. this cost was not covered by insurance. the repair need to put the boiler back into working order as it has ceased to function. The the repair cost did not enhance the boiler or extend its useful working life. The amount 500 related to shop building and it has been included as part of the cost of shop building in non current assets. Whats the Correct treatment ?
Any help
Please start a new thread when you are asking about different topics (neither of these relate directly to double entry).
1. Inventory should be valued at the lower of cost and net realisable value. The cost is 1400, the net realisable value is 400, so they should be valued at 400.
(Our free lectures on inventory explain all this)2. Repairs should be charged as an expense in the Statement of profit or loss, and not added to the cost of the building (which appears in the Statement of financial position).
(Our free lectures on on-current assets and depreciation explain this)I do suggest that you watch our free lectures – they are a complete course for Paper F3 and cover everything need to be able to pass the exam well.
hi sir ,
something confusing i dun understand good purchase for resales on credit , when should i debit inventory ? n when should i dr purchase ? confusing .if question ask accounting equation : Assets = Liabilities + capital thn we add Assets n cr liabilities ?
if question given p& l we should adjust in Purchase ?
if question ask double entry , we should Dr Purchase Cr Trade payable ? am i rite ?
thank you
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