Question

On 31st March, goods sold at a sale price of Rs. 30,000 were lying with customer, Mohan to whom these goods were sold on 'sale or return basis' and recorded as actual sales. Since no consent was received from Mohan, the adjustment entry was made presuming goods were sent on approval at a profit of cost plus 20%. In the balance sheet, the stock with customers account will be shown at Rs_________.

• A. RS. 30,000
• B. RS. 24,000
• C. RS. 20,000
• D. RS. 25,000

Answer 1

The correct option is D RS. 25,000

If the goods are still lying with the buyer or the receiver of goods at the end of the accounting year and the specified time limit is set to expire, they are treated as closing stock. Thus, the entry for sales made earlier is canceled and they are recorded at cost price. However, when the goods are returned by the customer after the specified time limit no entry is passed.