COGS in Trading Business

[kandati_subramanyam]

Dear All,

In Trading Business,we just buy and sell the products.

When we sell the FG stock, entry will be COGS a/c Dr to FG Stock A/c ,at the time of PGI and at the time of Billing, the entry will be Customer A/c Dr to Sales A/c ,then finally where and how COGS A/c will be set off or adjusted.

Can any body throw some light on this?

Regards

Su

[ajaycwa1981]

Hi Subbu

THe scheme of entries you have specified are complete and correct... there is no question of COGS getting set off or adjusted

When you sell - 4 things happen

a. Stock depletes,

b. resulting in COGS

c. Revenue is generated

d. with a corresponding Dr to Customer, later on realizing into cash

So, All these 4 aspects are covered in the entries you mentioned... And this remains same in every industry whether trading or mfg

br, Ajay M

[kandati_subramanyam]

Thanks

Subbu

[kandati_subramanyam]

Can any body help me help me on this?

Thanks

Su