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Journal Entry: Goods Sold, Inventory Sold, Merchandise Sold

Arjun EP

Published on: September 28, 2020

How to make journal entry for goods sold, inventory sold, merchandise sold

Here, sales mean sales of business goods, inventory or merchandise.

After purchasing the goods, they are sold including profit.

Sometimes at the time of stock clearance, there may be loss.

Sales are the most important elements of entire business.

The sales amount must include only sale of goods NOT sales of fixed assets.

Sales include both the cash and credit sales made during the accounting period.

Sales returns or return inward is deducted from sales.

It is main income of organization.

It is credited in journal entry and in trading account.

Goods Sold, Inventory Sold, Merchandise Sold

Cash¹ account	Dr	Cash received	Increase in assets
Bank² account	Dr	Cheque received	Increase in assets
Mr A’s account³	Dr	Credit sales to person	Increase in assets
XYZ Traders³ account	Dr	Credit sales to firm	Increase in assets
Debtor⁴ or customer account	Dr	Credit sales but no name	Increase in assets
Bills receivable⁵ account	Dr	Bill received	Increase in assets
To Sales account	Dr	Total value of sales	Increase in revenue
(Being- goods sold………..)

Keep in Mind (KIM)

When nothing is saying about transaction, it is cash¹ transaction.

When ‘cheque or bank’ is given in the question, it is bank² transaction.

When name of person¹ and firm³ is given, it is credit transaction.

When cash and cheque is given with name of person and firm is given, it is cash transaction.

When credit sales are given but name of person or firm is not given, we should write debtor⁴.

Bills receivable⁵ is credit transaction but it is secured transaction.

Journal Entry

In the book of …………

Date	Particulars		LF	Amount Dr	Amount Cr
	Cash account	Dr		xxxxx
	Bank account	Dr		xxxxx
	Mr A’s account	Dr		xxxxx
	XYZ Trading account	Dr		xxxxx
	Debtors or customer account	Dr		xxxxx
	Bills receivable account	Dr		xxxxx
	To Sales account				xxxxx
	(Being- goods sold …………………………………………..………)

PROBLEM: 3A

June 17, SK Book Supplier sold books and copies for cash Rs 80,000

Required: Journal entry

[Answer: Sales = 80,000]

SOLUTION:

Journal Entry

In the book of SK Book Supplier

Date	Particulars		LF	Amount Dr	Amount Cr
June, 17	Cash account	Dr		80,000
	To Sales account				80,000
	(Being- books and copies sold in cash)

Journal Entry for American Style

Date		Debit $	Credit $
June, 17	Cash account	80,000
	To Sales account		80,000
	To goods/inventory sold for cash …………………………………

Journal Entry for European Style

Date			€	€
June, 17	Cash account	Dr	80,000
	To Sales account			80,000
	To goods/inventory sold for cash ……………………………

PROBLEM: 3B

AD Wine Dealer sold Signature Whisky for cash Rs 45,000; Red Label Whisky by cheque Rs 85,000

Required: Journal entry

[Answer: Sales = Rs 130,000]

SOLUTION:

Journal Entry

In the book of AD Wine Dealer

Date	Particulars		LF	Amount Dr	Amount Cr
	Cash account	Dr		130,000
	Bank account	Dr			45,000
	To Sales account				85,000
	[Being- Signature Whisky and Red Label Whisky (goods) sold in cash]

PROBLEM: 3C

AK Hardware Store sold plywood by cheque Rs 150,000; sun-mica for cash Rs 30,000 and mirror glass of Rs 50,000 to Sharma Traders

Required: Journal entry

[Answer: Sales = Rs 230,000]

SOLUTION:

Journal Entry

In the book of AK Hardware Store

Date	Particulars		LF	Amount Dr	Amount Cr
	Bank account	Dr		150,000
	Cash account	Dr		30,000
	Sharma Traders account	Dr		50,000
	To Sales account				230,000
	[Being- plywood, sun-mica and mirror glass (goods) sold in cash and on credit]

Keep in Mind (KIM)

Sharma Traders* is the name of business firm (company, organization, concern)

Sold to business firm is debit transaction; Therefore, Sharma Traders is debited.

PROBLEM: 3D

MK General Store sold sundry goods worth Rs 2,000 on credit

[Answer: Sales = 2,000]

SOLUTION:

Journal Entry

In the book of MK Departmental Store

Date	Particulars		LF	Amount Dr	Amount Cr
	Debtors account	Dr		2,000
	To Sales account				2,000
	(Being- sundry goods sold on credit)

Keep in Mind (KIM)

Most of small firm are not registered. They do their business without VAT or GST bill.

They do not have name of firm also. They supply goods direct to purchaser.

In PROBLEM: 3D goods sold on credit but there is not any name of purchaser.

When name of purchaser is not given in the question, we should write Debtors.

PROBLEM: 3E

CK Distributors sold saree for cash Rs 80,000; shirting by cheque Rs 150,000; suiting worth Rs 40,000 to Sapana Saree Center and ladies suit worth Rs 3,000 to Sarita.

Required: Journal entry

[Answer: Sales = 273,000]

SOLUTION:

Journal Entry

In the book of CK Distributors

Date	Particulars		LF	Amount Dr	Amount Cr
	Cash account	Dr		80,000
	Bank account	Dr		150,000
	Sapana Saree Center account	Dr		40,000
	Sarita’s account	Dr		3,000
	To Sales account				273,000
	(Being- saree, shirting, suiting and ladies suit (goods) sold in cash and on credit) .

Keep in Mind (KIM)

Sapana Saree Center* is the name of business firm. It is credit transaction; therefore, it is debited.

Sarita is the name of person, it is credit transaction; therefore, she is debited.

PROBLEM: 3F

Sagar InfoTech, distributor of electronics goods, has following transactions:

June 1 Tablets PC sold to Narayani Computers for cash Rs 75,000.

June 3 Printer sold worth Rs 60,000 and cheque received.

June 5 Antivirus sold to Janakpur Computer House worth Rs 17,000 and bill received

June 6 Software CD and DVD sold to Mr Gupta worth Rs 3,000.

Required: Journal entries

SOLUTION:

Journal Entry

In the book of Sagar Infotech

Date	Particulars		LF	Amount Dr	Amount Cr
June, 1	Cash account	Dr		75,000
	To Sales account				75,000
	[Being- tablet PC (goods) sold to Narayani Computers
	for cash]
June, 3	Bank account	Dr		60,000
	To Sales account				60,000
	[Being- printers (goods) sold to and cheque received]
June, 5	Bills receivable account	Dr		17,000
	To Sales account				17,000
	[Being- antivirus (goods) sold to Janakpur Computer House
	and bill received]
June, 6	Mr Gupta’s account	Dr		3,000
	To Sales account				3,000
	[Being- software CD and DVD (goods) sold to
	Mr Gupta on credit]

Keep in Mind (KIM)

Tablets sold to Narayani Computer for cash, it is cash transaction; therefore cash is debited.

PROBLEMS AND ANSWERS

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =

Basic Problem: 4 SALES

The following extracted information is given to you:

(a) EP Publication sold books for cash Rs 30,000.

(b) DK Wine Dealer sold Ruslon Vodka for cash Rs 25,000; Blue Label Whisky by cheque Rs 35,000.

(c) MN Hardware Store sold plywood by cheque Rs 80,000; four-mica for cash Rs 20,000 and window glass of Rs 15,000 to Chaudhary Traders

(d) MK Kirana Pasal sold sundry goods worth Rs 2,000 on credit

(e) CK Cloth House sold saree for cash Rs 60,000; suiting worth Rs 40,000 to Khushbu Saree Center; shirting by cheque Rs 50,000; and ladies suit worth Rs 2,000 to Manju.

Required: Journal entries

[Answer: Sales: (a) 30,000; (b) 60,000; (c) 115,000; (d) 2,000; (e) 152,000]

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =

Basic Problem: 5 SALES

SVS Mobile House, distributor of electronic gadgets, has following transactions:

June 1 Tablets PC sold for cash Rs 35,000.

June 3 Mobiles sold worth Rs 40,000 and bill received.

June 5 Memory card sold to Sky Computer House worth Rs 17,000 by cheque.

June 6 Mobile accessories sold to Mr Pant worth Rs 2,000 on account.

Required: Journal entries

[Answer: Sales: (1) 35,000; (3) 40,000; (5) 17,000; (6) 2,000]

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One Comment to Journal Entry: Goods Sold, Inventory Sold, Merchandise Sold

Marian says:

February 6, 2021 at 4:33 am

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