Journal entry for Purchase and Sale of Goods.

Journal entry for sales? Difference between Book value of goods and Cost of goods?
Goods having book value Rs 12000 sold for Rs. 10000.
cash a/c Dr. ------10000/-
To Sales a/c------------------10000/-

Goods having book value Rs. 5000 sold for Rs. 6000
cash a/c Dr.-------6000/-
To sales a/c---------------6000/-

This is given in one of text book, is it a correct form of expression? Why there is no entry for profit and loss account?

what will be the entry for following transaction?
a) Goods coasting Rs. 25000 was sold at Rs. 32000
b) Goods costing Rs 15000 was sold at Rs 12000.
( difference between Book value of goods and cost of goods, clarify this as well)
Thank You,
Best Regards

asked Feb 3, 2017 in Journal Entries by Anand Prashad (23 points) 6,004 views

1 Answer

0 votes

Book value of goods represents in most cases purchase price or cost price of goods.  Inventory is valued at cost price or market price whichever is low.  So, at the end of the year if the market price of the goods fall below the purchase price/cost price, then goods will be written down to its market price.  In such case the reduced value of goods will be its book value or cost of goods.

answered Feb 7, 2017 by jbsclasses (3,971 points)