Journal Entry for Goods Sold | Goods Sold in Journal Entry
Arjun EP
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.
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 trading account.
Goods Sold, Inventory Sold, Merchandise Sold
|
Cash1 account Bank2 account Mr A’s account3 XYZ Traders3 account Debtor4 or customer account Bills receivable5 (A/R) To Sales account (Being- goods sold ……… |
Dr Dr Dr Dr Dr Dr
|
Cash received Cheque received Credit sales to person Credit sales to firm Credit sales but no name Bill received Total value of sales |
Increase in assets Increase in assets Increase in assets Increase in assets Increase in assets Increase in assets Increase in revenue |
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 Bank account Mr A’s account XYZ Trading account Debtors or customer account Bills receivable (A/R) account To Sales account |
Dr Dr Dr Dr Dr Dr
|
|
xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx |
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 To Sales account |
Dr |
|
80,000 |
80,000 |
|
|
(Being- books and copies sold in cash) |
|
|
|
|
Journal Entry for American Style
|
Date |
|
|
Debit $ |
Credit $ |
|
June, 17 |
Cash account To Sales account To goods/inventory sold for cash |
|
80,000
|
80,000
|
Journal Entry for European Style
|
Date |
|
|
|
€ |
€ |
|
June, 17 |
Cash account To Sales account To goods/inventory sold for cash |
Dr
|
|
80,000
|
80,000
|
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 Bank account To Sales account |
Dr Dr |
|
45,000 85,000 |
130,000 |
|
|
[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 Cash account Sharma Traders account To Sales account |
Dr Dr Dr |
|
150,000 30,000 50,000 |
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. |
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PROBLEM: 3D
MK General Store sold sundry goods worth Rs 2,000 on credit
[Answer: Sales = Rs 2,000]
SOLUTION:
Journal Entry
In the book of MK Departmental Store
|
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
|
Debtors account To Sales account |
Dr |
|
2,000 |
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 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 Bank account Sapana Saree Center account Sarita’s account To Sales account |
Dr Dr Dr Dr |
|
80,000 150,000 40,000 3,000 |
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 To Sales account [Being- tablet PC (goods) sold to Narayani Computers for cash] |
Dr
|
|
75,000 |
75,000 |
|
June, 3 |
Bank account To Sales account [Being- printers (goods) sold to and cheque received] |
Dr |
|
60,000 |
60,000 |
|
June, 5 |
Bills receivable account To Sales account [Being- antivirus (goods) sold to Janakpur Computer House and bill received] |
Dr |
|
17,000 |
17,000 |
|
June, 6 |
Mr Gupta’s account To Sales account [Being- software CD and DVD (goods) sold to Mr Gupta on credit] |
Dr
|
|
3,000 |
3,000 |
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]
Basic Problem: 5 SALES
SVS Mobile House, distributor of electronic gadgets, has following transactions:
June 1 Tablets PC sold cash Rs 35,000.
June 3 Mobiles sold worth Rs 40,000 and bill received.
June 5 Memory card to Sky Computer House worth Rs 17,000 by cheque.
June 6 Mobile accessories sold to Mr Pant worth Rs 2,000.
Required: Journal entries
[Answer: Sales: (1) 35,000; (3) 40,000; (5) 17,000; (6) 2,000]
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