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Accounting for cashback received from paytm, freecharge etc.

24 June 2016

This issue was faced by me in the audit. I will take an example to explain the question.

Elec. bill payment of rs. 1000 was made through paytm. Please note that this payment is not like first money is loaded in wallet and then payment is made but it was directly made from the bank account through paytm. I received 100 as cashback.

Then another mobile bill payment of rs 500 was made for which 100 cashback was used. So payment from bank was rs. 400 only.

Please tell me the accounting of both the transactions and also how it will settle in end because ultimately everything is to be trf to p&l or balance sheet.

Thanks to those who will try to give the answer.

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16 Replies

Xavier (professional ) (32 Points)
Replied 24 June 2016

Electricity charges Dr 1000
to bank account 1000

Xavier (professional ) (32 Points)
Replied 24 June 2016

other receivable Dr 100
Misc. income. 100

Telephone expenses acct Dr 500
to bank account. 400
to other receivables. 100

2 Like

JAY MEHTA (10 Points)
Replied 24 June 2016

But then again please complete it till end of transferring it to p&l because

Misc. income will be trf to p&l as income but actual cashback which was primarily a income is already been used against bill payment.

So actually seeing there is no income left after second tran. But even though it will be reflected in p&l.

Harshit Kabra (INVESTOR) (Student CA final) (1113 Points)
Replied 25 June 2016

paytm Dr 100
income. 100

Telephone expenses acct Dr 500
to bank account 400
to paytm 100

income acct Dr 100
to p&l acct 100

Hope u will understood clearly.
thnks n regards

2 Like

Rammi_RP Rawat (Accountant ) (386 Points)
Replied 25 June 2016

Kindly pass this entry

A). Elec. Bill Payment

Utilities expense Dr..1000

Bank A/C Cr........1000

B). Telephone Bill Payment

Utilities expense Dr..400

Bank A/C Cr........400

Note :- Rs.100 cashback not received in your bank account. If Received then go with Mr. Harshit Kabra

1 Like

Harshit Kabra (INVESTOR) (Student CA final) (1113 Points)
Replied 25 June 2016

ultimately u are crediting bank for rs.400..
if it received in bank then u will have to debit the bank and credit the paytm, but mrs/ms.

Harshit Kabra (INVESTOR) (Student CA final) (1113 Points)
Replied 25 June 2016

but mr.rammi * even not received in bank u are crediting 400 nd i was also crediting 400 that was right,
if u are not utilizing ur cashback from paytm, then u will show assets side income receivable.
and credit the bank by 500 debit the income by 100.
if u are utilizing such cashback then as per my earlier opinion.

Rammi_RP Rawat (Accountant ) (386 Points)
Replied 25 June 2016

yas you are right mr. harshit

1 Like

SANJAY KUMAR (Accountant) (24 Points)
Replied 25 June 2016

1. Electriticity Exp.- Dr. 900/- Paytm A/c- Dr. 100/- To Bank A/c Cr..1000/- 2) Telephone Exp. Dr 500/- Paytm A/c Cr. 100/- Bank A/c Cr. 400/-

Harshit Kabra (INVESTOR) (Student CA final) (1113 Points)
Replied 25 June 2016

first of all, again considering the que of mr.jay mehta, he saying 100 cashback used and bank debited 400, so mr jay, there was opening accrued income of rs 100 which u was utilized there now here updated entry will be -

Electricity exp 500
to bank 400
to mis income(earlier shown as receivable from patym) 100

i will be more reliable.

thnks.