Accounting entry for disclose income/stock

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

30 December 2009 hi, i have a proprietor firm and it has disclose stock in the year so plzzz give me solution for this case as soon as possible.

Vanita Rathi

Vanita Rathi (Expert)
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30 December 2009 Debit stock and credit other income.

Arjuna Raina

Arjuna Raina (Expert)
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30 December 2009 Stock A/c....... Dr
To Liability

Vanita Rathi

Vanita Rathi (Expert)
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30 December 2009 If it is a declared stock it will be treated as an income. Liability against what?

Murtaza I Bhagat

Murtaza I Bhagat (Expert)
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30 December 2009 yes, if you have stock A/c at the end of the f.y then it will be in your P/L A/c in Income side.Stock A/c is also sharing part of the Profit.

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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30 December 2009 Pass the following more entry with the value of stock further disclosed :

Stock Declared a/c Dr
To Profit & Loss A/c
--------------------

Since the excess stock declared will show more net profit; hence it will be automatically included in capital account at the end of the year.

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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CA Tilak Raj Sharma

CA Tilak Raj Sharma (Expert)
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30 December 2009 Stock is declared only in the case of surveys where the prop. surrender stock etc. It is income of the firm or prop. and also an addition to the capital. so debit stock account and credit capital account. profit on sale of such stock will be taxable again as a normal profit as he regularly earning in his business.

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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30 December 2009 Dear Tilakraj,

Thanks for discussion.

Please show all the accounting entires togetherwith effect thereon in profit and loss account.

The profit should increase with the value of stock declared.

In the method suggested by you; it will give double effect in capital account.

Two addition of a single income will not be possible as written by you -

"It is income of the firm or prop. and also an addition to the capital."

CA Tilak Raj Sharma

CA Tilak Raj Sharma (Expert)
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30 December 2009 I think Mr. Rakhecha you misunderstood my point. How can be addition made two times with a single entry.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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30 December 2009 Dr.Stock
Cr.Profit & Loss A/c

CA Ravi Sisodia

CA Ravi Sisodia (Expert)
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30 December 2009 stock a/c Dr.
to p/l a/c

CA Deepak P. Agrawal

CA Deepak P. Agrawal (Expert)
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05 January 2010 Its getting crazy out here.........
Godness gracious. A simple issue is blown out of context.
With due respects to all in my opinion only CA. Tilak Raj has got the correct answer. Entry Should be Stock A/c and credit Capital A/c. That is the only solution.
At theend of the year closing stock will automaticaly show increased value after taking into consideration the stock declared. Credit effect has to be given to Capital A/c. only.
How on earth can we give effect to Stock a/c. dr and cr P/L?????