Goods ( Cost price –Rs 2000, sales price- Rs 3500) distributed as free samples among prospective customers were not recorded in the books of account
free samples a/c dr 2000
To goods 2000
Incorrect AnswerAdvertising exp.a/c dr 2000
To purchases 2000
Correct AnswerAdvertising exp.a/c dr 3500
To purchases 3500
Incorrect AnswerNone of the above
Incorrect AnswerExplanation:
Goods ( Cost –Rs 2000, sales price- Rs 3500) distributed as free samples is for advertisement purpose it is an expense to the business so advertisement a/c will be debited and purchse a/c will be credited with cost price
Advertising exp.a/c dr 2000
To purchases 2000