transfer of non-inventory items

This topic has 4 replies, 4 voices, and was last updated 9 years ago by danielglover.

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March 20, 2013 at 11:43 am #120128
targetacca
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a business owner has two shops A and B. He buys some items (for eg non inventory like stationaries in bulk) for 2000 and transfers items worth 750 to be used in shop B. What are the entries in shop A. Now shop B owes Shop A the amount of 750.

in shop A records

Dr stationaries expense 2000

Cr cash 2000

and regarding the transfer of items

Dr Receivables from B 750

Cr ????????
March 20, 2013 at 9:50 pm #120148
danielglover
- Topics: 13
- Replies: 100
Cr NCA (stationary) 750
Dr receivable 750

The double entry would relate to the SOFP. If there was profit or loss made on the sale, it would go to the I/S as well. If (A) sold all the stationary for £750, £250 would go to C.O.S as an expense. This would be reversed on consolidation (you will learn consolidation in F7).

Hope this helps.
March 21, 2013 at 3:53 am #120160
alkemist
Moderator
- Topics: 3
- Replies: 493
Actually, if the items were expensed, then the entry would be

Dr: Receivable from B 750
Cr: Sales to B 750

your entry would have only worked if the items were debited to non-current asset when purchased.
March 21, 2013 at 7:32 am #120164
Kaymakov
- Topics: 24
- Replies: 30
sorry I do not understand how there can be any profit if we speak ONLY ONE BUSINESS ENTITY though it has two own shops?

please explain
March 21, 2013 at 9:40 am #120176
danielglover
- Topics: 13
- Replies: 100
Sorry, Alkemist, I thought:

Dr Receivable Cr Stationery
750, 1000

Loss on disposal would go to the I/S
250

Is this wrong?
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