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Ciara_lyng
Accounting sole trader

no record has been made for ‘goods in transit’ on 31/12/05. the invoice for these goods have been recieved showing the recommended retail selling price of €7000 which is cost plus 25%. Can someone please explain to me how purchases and creditors are effected??


3 Comments
fun4me
fun4me
you add 7000 to creditors as you need to pay them that. in purchases you add 5600 (cost) because thats purchases. and in closing stock you add 5600 cause u didnt add that in as it was at the end
anhe
anhe
I disagree. I think the recommended retail selling price is what they recommend you sell them at to your final customers. I would add €5600 to creditors, purchases and closing stock ( in both the balance sheet and trading account)
catreidxo
catreidxo
Creditors: you bought goods from creditors and haven't entered it in any accounts ("no record has been made"), so you need to add cost price to creditors (5600) because you buy goods at *cost* price Purchases: this is affected because sole traders purchase products to sell on. The double entry for 5600 goes into purchases The 7000 selling price figure isn't recorded anywhere I think, that's just there so you can work out what cost price is.
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