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Reply from VidhyaDhar on Jan 9 at 8:41 PM Hi Amy
Though your solution is correct from the double entry point I am not sure
if it is acceptable by statute(s) prevailing in any country.
Are you suggesting?
1. Customer Debit and Revenue Credit along with ( Goods
in transit Debit and Stock Credit ) as the first step.
and
2. COGS Debit and Goods in transit Credit as the second step?
Wouldn't it hamper profit determination?
The first entry inflates profit ( since Goods in transit is a balance
sheet item ) without related cost.
The second entry inflates COGS without reference to Revenue element and
deflates profit .
What if step 1 happens during year end close and step 2 in the beginning of
the next fiscal year ?
Is that acceptable accounting norm? Does that not violate the matching
principle? I wonder !
Regards
VidhyaDhar
| | | ---------------Original Message---------------
From: Amy A
Sent: Monday, January 09, 2012 1:25 PM
Subject: Revenue and COGS Cancellation and Reposting for Revenue Recognition Contracts
Sridhar,
One question to your solution. Is the following entry manual? The effort is to avoid manual posting so pl. clarify.
Once you get the acceptance, invoice the customer
At the time of invoice, post the following entry
Dr COGS
Cr Goods in transit
Thanks,
Amy |
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