Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Revenue recognition on good of return basis
- This topic has 5 replies, 2 voices, and was last updated 7 years ago by MikeLittle.
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- November 27, 2016 at 5:51 pm #351934
Dear Mike,
It is not clear the accounting treatment for good sold on return basis
Let say that a company sell $1000 goods on return basis, cost 900
Am I right to say that the accounting treatment is a follow?
When goods are sold (shipped to the customer)
Dr: Receivable 1000
Cr Sale 1000Dr Cost of sale 900
Cr Inventory 900At the end of the year if the customer has not confirmed to accept the goods
Dr: Sale 1000
Cr Receivable 1000Dr Inventory 900
Cr Cost of sale 900Thanks for your help
Gabbi
November 27, 2016 at 9:02 pm #351985No!
There is no entry to be made when the goods are delivered
The first time anything is entered is when the customer tells us that the goods have been sold … ownership / risks and rewards have not been transferred
Go from there!
November 30, 2016 at 10:01 pm #352719Thanks
Should I use the same logic when we ship material to the customer consignment?
I think so as the ownership / risks and rewards have not been transferred, but please correct me if I am wrong.Thanks Gabriella
December 1, 2016 at 7:39 am #352784No, you’re not wrong – you are correct
December 1, 2016 at 8:08 am #352798Thanks a million
Best Regards
Gabriella
December 1, 2016 at 8:16 am #352802You’re welcome
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