13. Goods distributed as free samples :
This is a sales promotion method, it is assumed as advertisement expenses.
Advertisement A/c Dr.
To Purchases A/c
(Goods distributed as free sample)
Accounting treatment : (i) cost of goods distributed as free samples will be deducted from purchases in the debit side of trading account.
(ii) Advertisement expenses account will be debited to profit and loss account.
Illustration No. 9.
Following is the Trial Balance of Rajesh Export as on 31st March, 2011.
Additional Information
(i). Closing Stock at market value as on 31/03/2011 is Rs. 50,000, However its cost was Rs. 60,000.
(ii) Provide depreciation on Plant and machinery and Land and Building @10% and 5% respectively.
(iii) Insurance was prepaid to the interest of Rs. 200.
(iv) Outstanding liabilities in respect of Wages and Salary is Rs. 5,000.
(v) Loan taken from Bank on 1st July 2010.
(vi) Investment was purchased on 01st April, 2010.
(vii) 10% of the Commission received is in respect of work to be done in next year.You are required to prepare
(i) Trading and Profit and Loss account for the year ended 31st March, 2011. and
(ii) Balance sheet as at that date.
Solution :
Trading and Profit and Loss Account for the year ended 31st March, 2011
Balance Sheet
As at 31st March, 2011
CBSE Accountancy Class XI ( By Mr. Aniruddh Maheshwari )
Email Id : [email protected]
