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Accounting treatment of expenses - reg

This query is : Resolved 

It's a partnership firm engaged in the business of Real Estate.

Involved in purchase and selling of plots.

In the process Firm has paid stamp duty to the Govt. through Challan by way of cash from outside the books of account for execution of sale deeds in favour of the Firm.

Similarly for execution of sale deeds in favour of customers by the Firm.

In other words the entire stamp duty was paid by way of cash from outside the books.

Now my query is how do I account for these expenses in the Books of A/c.

Can I debit the expenses in P& L and credit the amount to Partners Capital A/c.

Plz advise me.


In respect of purchase of plots debit plot purchase account and credit partner's capital account.
In respect of sale of plots cash might have been paid by the.buyer so no need for any accounting on it.

Sir,
Thank you .
But in case of sale of plots , the buyers have paid the stamp duty amount to the Firm through Bank and was accounted under Advances from Customers(Liability).
But the Firm has paid the stamp duty to the Govt. by way of cash from outside the Books.
So how to account for in the Books and pass the entry.
Plz advise.

In this case debit advance and credit partner's capital.

Sir,
Should the Partners Capital A/c be credited to the partners account according to their profit sharing ratio bcoz there are two partners.
Plz advise.

Credit based on who paid the money and person having source of income. IT dept may question source of income and cash payment.


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