Sir in this question in the first adjustment which is regarding Revenue and comission. If I want to treat agency sales as other operating income, then this other operating income head will come after which head in statement of profit or loss? I mean would it be fine to show other operating income as follows
GP X
Dist exp (X)
Admin exp (X)
Other operating income - agency sales X
Operating profit X
Finance cost (X)
Investment income X
PBT X
Secondly double entry for the above adjustment would be following na
Dr Sales 20000
Cr agency sales 2000
Cr COS 15000
Cr Payable 3000
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XTOL J14
Hi,
Yes, your presentation of other operating income is fine to show before operating profit.
Also, your double entry is correct too. Top work!
Thanks
Sir here what would be more appropriate i.e to
Dr Sales 20000
Cr agency sales 2000
Cr COS 15000
Cr Payable 3000
And here show agency sales as other operating income
OR
Dr Sales 18000
Cr COS 15000
Cr Payable 3000
and here I am showing agency sales as revenue
In a similar question of kit which says that Creg work as an agent for a
number of smaller contractors earning commission of 10%. Creg's revenue includes $6 million received from clients under these agreements with $5.4 million in cost of sales representing amount paid
to contractors
What adjustment needs to be made in revenue in respect of commission sales?
a) Reduce revenue by $6 million
b) Reduce revenue by $5.4 million
c) Increase revenue by $600000
d) no adj is required
Here they have marked option b. So I think here they performed following entry
Dr sales 5400
Cr COS 5400
So what is more appropriate
Either treatment is applicable.
Thanks
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