NOTES

On 31st December, 2016 goods sold at a sale price of Rs.3,000 were lying with customer, Ritu to whom these goods were sold on ‘sale or return basis’ were recorded as actual sales. Since no consent has been received from Ritu, you are required to pass adjustment entries presuming goods were sent on approval at a profit of cost plus 20%. Present market price is 10% less than the cost price.

Notes of Accounting for Special Transactions - Sale of Goods on Approval or Return Basis (Old Syllabus)

1. A firm sends goods on sale or return basis. Customers having the choice of returning the goods within a month. During May 2016, the following are the details of goods sent:

   Date(may)	2	8	12	28	20	27
   Customers	P	B	Q	D	E	F
   Value(Rs.)	15,000	20,000	28,000	3,000	1,000	26,000

    Within the stipulated time, P and Q returned the goods and B, D, and E signified that they have accepted  the goods. Show in the books of the firm, the Sale or Return Account and Customer- P for Sale or Return Account on 15th June, 2016

   
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2. On 31st December, 2016 goods sold at a sale price of Rs.3,000 were lying with customer, Ritu to whom these goods were sold on ‘sale or return basis’ were recorded as actual sales. Since no consent has been received from Ritu, you are required to pass adjustment entries presuming goods were sent on approval at a profit of cost plus 20%. Present market price is 10% less than the cost price.
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3. X supplied goods on sale or return basis to customers, the particulars of which are as under.

   Date of dispatch	Party’s name	Amount Rs.	Remarks
   10.12.2016	M/s.ABC	10,000	No information till 31.12.2016
   12.12.2016	M/s.DEF	15,000	Returned on 16.12.2016
   15.12.2016	M/s.GHI	12,000	Goods worth Rs.2,000 returned on 20.12.2016
   20.12.2016	M/s.DEF	16,000	Goods Retained on 24.12.2016
   25.12.2016	M/s.ABC	11,000	Good Retained on 28.12.2016
   30.12.2016	M/s.GHI	13,000	No information till 31.12.2016

   Goods are to be returned within 15 days from the dispatch, failing which it will be treated as sales. The books of ‘X’ are closed on the 31st December, 2016.

   Prepare the following accounts in the books of ‘X’.

   (a) Goods on “sales or return, sold and returned day books”.

   (b) Goods on sales or return total account.

   
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4. Ram sends his goods to some of his customers on Approval or Return basis. The cost of the product is Rs. 8,000 per unit and a markup of 25% on cost is used. The following information is given -

   Goods sent to customers during the period = 25 units.

   Goods returned by customers before approval period = 6 units.

   Goods approved by customers before end of the financial period = 16 units.

   Goods with customers pending approval (period not expired) = 3 units.

   Ram accounts for these transactions as Ordinary Sales. Give the Journal Entries for the above.

   
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5. Krishna regularly sends goods to his customers on Approval or Return basis. The cost of the product is Rs. 4,000 per unit and a markup of 1/3^rd on Price is used. The following information is given for the month of January -

   Date	7th	14th	18th	23rd	25th
   Customer Name	A	B	C	D	E
   Quantity sent	4	4	6	3	2

   B and C approved the goods within the stipulated time, while A and E have rejected and returned the goods on 27^th. In respect of D, the time period for acceptance has not yet elapsed. Show the accounting entries in the SIR Day Book, Sale or Return Account (in SIR Ledger).

   
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