Continuation of the first part;
list (invoice)
120,000 = 20,000 + 100,000
Now, if we want to get from the list price to the final price, we must act as follows:
100000 =] 120 ÷ 100 [× 120000
So, I remind you once again that in this method, the balance of the branch’s merchandise represents the apparent profit or loss of the branch, which is closed to the adjustment account.
Due to the non-specific profit in this registration method, which is applied when the goods are shipped, it is also different from the cost price method in order to identify the desired profit.
Branch inventory at list or selling price
The goods sent to the branch at full price
Adjustment of the branch’s goods
Issue :
Atlas company has a branch in Abadan, which sends all goods based on the cost price plus 25% to the branch, which does not have financial offices.
The inventory of the first period of the branch at list price 840,000 Rials
The inventory of the branch at the end of the period at the cost price of 240,000 rials
It is desirable: record the above operations
1) Branch inventory 840,000
Goods sent to branch 672000
Adjustment of branch goods 168,000
Calculation method:
672000 =] 125 ÷ 100[ × 840000
168000 = ] 125 ÷ 25 [ × 840000
2) The inventory at the end of the period is 240,000
Branch Item Adjustment 60,000
Branch inventory 300,000
Calculation method:
60000 = 25% × 2400000
300000 = 60000 + 240000
Selling price method
This method is used when the center can determine the sales rate and keep it almost constant, so it is used when the product is a monopoly in the market.
In this method, the account balance of the goods sent to the branch shows the net sales of the branch.
In this method, we do not have separate profit and loss, but we have total profit and loss.
And there is only one profit and loss account, which is the profit and loss account of the center.
To register the stock of the first and the end of the period, we act as follows:
1. To be recorded at cost adjusted by gross profit and loss.
2. It is recorded at the selling price, which is recorded as the shipping and return of goods.
The first balance is two. For the selling price:
Branch inventory
Goods sent to the branch
At the end of the course:
Goods sent to the branch
Branch inventory
Closing accounts in the selling price method:
First, the balance of the goods of the branch is taken, and the balance shows the apparent profit and loss of the branch, and it is closed with the account of the goods sent to the branch.
The inventory of the branch is closed with the account of the goods sent to the branch
The goods sent to the branch are closed with the center’s profit and loss account
Mehdi Koh Soltani (financial services, accounting, financial and tax consultant):
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This post is written by Mahdi_kohsoltani