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1. • CommentAuthorlamyalyn
   • CommentTimeSep 19th 2007 edited

    
   How is the treatment for goods in transit ? Payment is made in advance and goods would be recieved in 6 to 12 months time.
2. • CommentAuthorabril
   • CommentTimeSep 27th 2007

    
   what do you mean treatment? how should it be recorded or will be included in inventory account?
   
   well anyway, you have to determine the terms, is it FOB destination point or FOB shipping point?
   also the payment terms, is it payable n30?n40?n60? etc.. etc.. what about discount?
   
   usually the question provides all the details.

   Thankful People: fizzy77
3. • CommentAuthorfizzy77
   • CommentTimeSep 28th 2007

    
   I am ALSO very interested about how this should be journalised please and in addition - my question is how do I record advance payment received from clients who placed an order for "out of stock" items (so goods in transit" case too as we are also awaiting delivery from our vendor? need HELP please. Thanks in advance.
4. • CommentAuthorabril
   • CommentTimeSep 28th 2007 edited

    
   advance payment received from the customers is recorded as unearned revenue (for service) or unearned income (for products)
   
   journal entry:
   dr. Cash
   cr. unearned revenue or income
   
   after you have given the service or the item to your customer, the entry would be now..
   
   dr. unearned revenue or income
   cr. service revenue/sales
   
   purchases in transit recorded in a usual manner
   
   dr. purchases
   cr. accounts payable or cash
   cr. purchase discount (if there's any)
   
   at the cut off period, wether the goods in transit is included in the final inventory count depends on the shipment terms.
5. • CommentAuthorlamyalyn
   • CommentTimeSep 30th 2007

    
   Thanks abril. When I posted the question before, I saw the entries are as follows:
   
   dr. Stock cr. Bank
   
   So, there is no cut off period as to whether the GIT is included in the inventory or not. It's always included. This is particularly so especially for replacement orders. SO, when we perform physical count, the numbers won't tally and the stock is overstated right! Do you think the entry is correct? Could you explain the significant of FOB destination point and FOB shipping point.
6. • CommentAuthorabril
   • CommentTimeOct 2nd 2007

    
   im sorry lamyalma, my reply answers frizz's question.. you have a different perspective. in frizzy's question, they are the seller; in your question you are the buyer.. it needs a different entry. regarding your journal entry, it has a little problem in it because since you bought it in advance, you have to recognize prepayment. also, i have never encountered an account title of "bank" perhaps its suppose to be "cash in bank". i want to explain further about the significant of FOB destination and shipping point - its has something to do on who holds the ownership of the goods while in transit and at what point the ownership pass from seller to buyer. but i have no enough time. i'll get back to you again later or if you like, you can email me.
7. • CommentAuthormurali.mangad
   • CommentTimeJul 11th 2008

    
   The answer for the question " How is the treatment for goods in transit ? Payment is made in advance and goods would be recieved in 6 to 12 months time. " is not clear. could you explain entry for purchase of goods in transit. ie, payment is made in 6 months advnce