When goods are distributed as free samples, the adjustment entry requires:
A. Debiting P&L A/c, Crediting Sales A/c
B. Debiting Free Samples A/c, Crediting Cash A/c
C. Debiting Purchases A/c, Crediting Advertisement A/c
D. Debiting Advertisement A/c, Crediting Trading A/c (or Purchases A/c)
Answer: Option D
Solution (By JKSSB Mock Tests)
Free samples are an advertising expense (debit), and they reduce the stock of purchased goods at cost price (credit Purchases/Trading).
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