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On 3o spetemebr 2008 the following require an inclusion in the financial statements-
1) on 1st september 2008 McD’s received 5000 as a deposit for goods which were despatched to the customers on 15 October 20082) on 1 auguest 2008, MCD paid an insurance prempium of 5000 for the six months commencing on 1st July
What will be the current assets and current liabilities>
SIr I am a bit confused with the 1) as is it a sale or income, and why have they included it as a currrent liability. Because the double entry should be Dr Cash and Cr Sales.
The sale is not made until 15 October, which is after the end of the accounting period. Until then the 5,000 deposit is still owed to the customer. (They might end up not supplying the goods in which case the money would have to be repaid). The sale is not made until the goods actually pass to the customer.
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