JOURNAL ENTRY FOR INDIRECT EXPENSE( SERVICE CHARGES,MAINTENANCE, AND OTHERS)

Journal entry for Service related Expense (excluding TDS)

Expense of the organisation include both direct and indirect .They may be related to services received by company in so many ways like Professional services, Rent, Contract services etc. The service receiver is liable to deduct on services at the time of booking or payment as per Expense tax act. Let us see some illustration

Journal entry for Rent expense

Rent paid to Parkas co. Rs.12000/-

                   Rent A/C      Dr                          12000
                         To Parkas Co. A/C                                12000


(Narration: - Being Rent paid to parkas co. entered vide bill no. xx )
The rules for passing Journal entry
Debit
Rent is expense for business and the same shown on profit on loss account at the year end. So, as per nominal account rule(Rent paid)
 “Debit all Expense or loss"(Expense Account)
Credit
Due to credit purchase we are liable to him. And he is selling us the goods on credit.The creditors balance will increase.
As per personal account rule (Parkas Co.) "Credit the giver account"(Current Liability)


Journal entry for Rent Expense (Including TDS)

Rent paid to Parkas co. Rs.12000/-

                     Rent  A/C     Dr                         12000
                           To Parkas Co. A/C                             10800
                           To TDS payable A/C                            1200

(Narration: - Being Rent paid to parkas co. entered vide bill no. xx )
The rules for passing Journal entry
Debit
Rent is expense for business and the same shown on profit on loss account at the year end. So, as per nominal account rule(Rent paid) “Debit all Expense or loss"(Expense Account)
Credit
Due to credit purchase we are liable to him. And he is selling us the goods on credit.The creditors balance will increase.
As per personal account rule (Parkas Co.) "Credit the giver account"(Current Liability)
Credit
TDS payable will be treated as representative person. When duties are payable will be treated as liability and shown as current liability on liabilities side of balance sheet. So, As per personal account rule (TDS payable) "credit the giver account"(Current liability)
Here in above case TDS is calculated on Rent .TDS @ 10% on 12000 =1200/-









Journal entry for Service Expense (Including Service tax)

As service tax is applicable on services, the service receiver is eligible to claim the service tax input as CENVAT credit and use the same credit to adjust against on excise duty payable(Not against the service tax payable)

Journal entry for Professional Charges

Professional charges payable of Rs.22000 (Including service tax of Rs.2000/-)to ABC Associates
                     
         Professional charges A/C    Dr      20000
         Service Tax Received A/C   Dr        2000
                   To ABC Associates                                22000

(Narration: - Being Professional charges booked against bill no.)
The rules for passing Journal entry
Debit
Professional charges is expense for business and the same shown on profit on loss account at the year end. So, as per nominal account rule(Professional charges) "debit all expense or loss"(Expense)
Debit
As we are paying duties on professional charges are eligible for Input credit and treated as asset.(I.e. the taxes paid to creditors are not expense and it has to be treated as asset and can be set off against the duties payable, But before treating it as asset the input eligibility should be checked. Normally the purchase related to manufacture Except Factory building items Ex-Cement& steel can be availed as Input credit)Ex: - EXCISE DUTY, VAT & SERVICE TAX.
Credit
Due to credit purchase we are liable to him. And he is selling us the goods on credit.The creditors balance will increase.
As per personal account rule (ABC Associates) "Credit the giver account"(Current Liability)

Journal entry for Professional Charges(including TDS)

Professional charges payable of Rs.22000 (Including service tax of Rs.2000/-)to ABC Associates

                     Professional charges A/C  Dr        20000
                     Service Tax Received A/C Dr          2000
                                   To ABC Associates                                20000
                                   To TDS payable A/C                               2000

(Narration: - Being Professional charges booked against bill no.)
The rules for passing Journal entry
Debit
Professional charges is expense for business and the same shown on profit on loss account at the year end. So, as per nominal account rule(Professional charges) "debit all expense or loss"(Expense)
Debit
As we are paying duties on professional charges are eligible for Input credit and treated as asset.(I.e. the taxes paid to creditors are not expense and it has to be treated as asset and can be set off against the duties payable, But before treating it as asset the input eligibility should be checked. Normally the purchase related to manufacture Except Factory building items Ex-Cement& steel can be availed as Input credit)Ex: - EXCISE DUTY, VAT & SERVICE TAX.
Credit
Due to credit purchase we are liable to him. And he is selling us the goods on credit.The creditors balance will increase.
As per personal account rule (ABC Associates) "Credit the giver account"(Current Liability)
Credit
TDS payable will be treated as representative person. When duties are payable will be treated as liability and shown as current liability on liabilities side of balance sheet. So, As per personal account rule (TDS payable) "credit the giver account"(Current liability)

In above case TDS is calculated on Professional charges excluding service tax .TDS @ 10% on 20000 =2000/-


Comments

  1. Great Article! I got too much information from this post. Thanks for sharing such a helpful article. Click here to more information about it

    ReplyDelete
  2. commercial disinfecting, Really I enjoy your site with effective and useful information. It is included very nice post with a lot of our resources.thanks for share. i enjoy this post.

    ReplyDelete
  3. Wow..Amazing blog.. This blog is very helpful for me. Thanks for sharing this information with us. I really appreciate your work.If you require about Company registration cost in delhi | company registration online delhi please click on it.

    ReplyDelete
  4. I really enjoyed your site with effective and useful information. Blu Commercial Cleaning is committed to providing the BEST commercial cleaning . We have grown so much and are now able to service many areas.

    We also utilize bluberry operations management system for daily operations management of our business.

    ReplyDelete
  5. Very Nice Article. It was very useful and informative article. Thank you for sharing. Kindly visit our website About Home Cleaning Services

    ReplyDelete

Post a Comment

Popular posts from this blog

AMALGAMATION :- JOURNAL ENTRIES IN THE BOOKS OF TRANSFEROR AND TRANSFEREE COMPANY

JOURNAL ENTRY FOR SALARY (including allowance and deductions)

FINANCIAL STATEMENTS AS PER NEW SCHEDULE III ,COMPANY ACT 2013 (BALANCE SHEET AND STATEMENT OF PROFIT AND LOSS)