chapter 15 return of stocks
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Chapter 15 return of stocks. VCE Accounting Unit 4. Theories. What is “credit note”? Reasons for purchase and sales return; Principles relate to this chapter; Characteristics relate to this chapter;. Credit Notes. - PowerPoint PPT PresentationTRANSCRIPT
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VCE Accounting Unit 4
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Theories What is “credit note”?Reasons for purchase and sales return;Principles relate to this chapter;Characteristics relate to this chapter;
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Credit NotesThe business document used to acknowledge
that goods have been replaced or refunded by our clients.
(p 301)Figure 15.1 Credit NoteWholesale Trading Credit Note No. 3389123 Power Ave Date: 10/7/10
Credit: Elsternwick Electricals 898 Nepean Highway Reason: Damaged in Transit
Description Qty Unit Price
Subtotal GST Total
Lead light touch lamps 4 $42.50 $170.00 $17.00
$187.00
Approved by: Ken Sparkie
Creditor/supplier
Our business name
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Reasons for ReturnWrong stocks have been delivered;Damaged products;Different products have been delivered.
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Principles Reporting PeriodBecause we record the return of sales/purchase
when the credit notes are issued.
Historical Cost (IDL) original cost of stocks
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characteristicsReliableRecord return of purchases/sales at their
original costs for the current reporting period.
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Practical – recording and reportingSample exercise: p 311 - Ex 15.1-identify the useful information for recording
and reporting in credit notes;-distinguish the effects on Sales Return Purchase Return-Change to Profit and Loss Statement, Balance
Sheet.
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Exercise 15.1Tran’s Toy Store
WHOLESALE TOY COMPANY No. 231199 Barbie RoadKensville 5025 date 28/6/2010
Credit: TRAN’S TOY SOTRE Reason: Incorrect colorDescription Qty Unit
PriceSubtotal
GST Total
Builder Blocks 10 $12.00 $120.00 $12.00
$132.00
Total (excluding GST) $120.00
Total GST $12.00
Total credit approved (including GST) $132.00
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Answer(a) Credit Note(b) Wholesale Toy Company issued the
document.(c) Effects: our business returns stock (out)Key Terms Account Amount
Assets Stock Control-Decrease
$120 (no GST, only stock value)
Liabilities GST clearing- IncreaseCreditor Control-Decrease
$12
$132 (inc. GST)
Owner’s Equity - -
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Extras for 15.1The Double entry will be recorded in Tran’s
Toy Store:
The Double Entry will be recorded in Wholesale Toy Company:
Ledger Account Dr/Cr Amount $
Stock Control Cr (decrease) $120
GST clearing Cr (increase) $12
Creditors Control Dr (decrease) $132
Ledger Account Dr/Cr Amount $
Sales Returns Dr (increase) $120
GST clearing Dr (decrease) $12
Debtors Control Cr (decrease) $132
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Extra for 15.1Stock card for Tran’s Toy (purchase return in
stock card)-FIFO method does not apply here.
Stock Item: Builder BlocksValuation Method: FIFO
Date Details In Out BalanceQty Cos
tVal. Qty Cos
tVal. Qty Cos
tVal.
27/6/10
Inv. 78 210
1112
22120
319
1112
33228
28/6/10
Credit Note 231
10 12 120
39
1112
33108
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Extra for 15.1Stock card for Wholesale Toy Company (sales
return in stock card)-FIFO method does apply here.
Stock Item: Builder BlocksValuation Method: FIFO
Date Details In Out BalanceQty Cos
tVal. Qty Cos
tVal. Qty Cos
tVal.
27/6/10
Inv. 78 210
1112
22120
10 13 130
28/6/10
Credit Note 231
10
12
120
1010
1213
120130
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Extra for 15.1
Date
Details General ledger
Sub.ledger
Dr Cr Dr Cr 30/06
Creditors control
132
Wholesale Toy
132
Stock Control
120
GST clearing
12
Date
Details General ledger
Sub. ledger
Dr Cr Dr Cr30/06
Sales Return
120
GST clearing
12
Debtors Control
132
Tran’s Toy 132
Stock Control
120
Cost of sales
120
Tran’s Toy (purchase return)
Wholesale Toy (sales return)
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Extra for 15.1Changes to accounting reports
Tran’s Toy Wholesale Toy
Profit and Loss Statement
Profit and Loss Statement
Nil Sales Revenue xxLess Sales Return 120Less Cost of goods sold ( 120)
Balance Sheet Balance sheet
Current Assets Stock Control 120
Current Liabilities Creditors Control 132 GST Clearing 12
Current Assets Stock Control 120 Debtors Control 132Current Liabilities GST Clearing 12Owner’s Equity ( sales return= COGS)
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Working TimeCredit Notes: Ex 15.2, Return of sales: Ex 15.4Return of purchase: Ex 15.5 Comprehensive: Ex15.10Read Stock Cards: Ex 15.13, Ex 15.15Comprehensive: Ex 15.16