Accounting help

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

16 July 2012 A company, say 'A', involved in manufacturing and selling some products undertakes job for manufacturing products for another company, say 'B'. The total raw material required for the manufacturing is supplied by the company 'B' to the company 'A'. The company 'A' spends on electricity, labour and consumables on making those products. Now the question is whether the cost of job work/serivce become an item of Trading Account or it is an item of Profit & Loss Account. Please note that in the job work/service no raw material is used by the manufacturing company 'A' and the company 'A' also manufactures and sells its own products.

CA SANJAY MUKHERJEE

CA SANJAY MUKHERJEE (Expert)
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16 July 2012 It would come under Trading Account as apart from material all other expenses are in the process of manufacturing.

Querist : Anonymous

Querist : Anonymous (Querist)

16 July 2012 Thanks for your reply. What effect will it have on GP? How the sales as shown in Sales Tax return will tally with the sales or gross receipts as shown in the Trading Account?

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