Book entry for amount deducted as penality

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Neetal Jain (Querist)
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10 October 2009 Hi..
This is Neetal.
Plz help me
A company has deducted amount as penality for not performing duty well from a secutiry company bill
My question is how that amount which is deducted as penality should be treated or pass a entry in the books..

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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11 October 2009 1) A Co ltd Dr 1000/-
To security charges 1000/-
(Being bill no.....dated....
raised towards security service
charges)

2) Penalty Dr 250/-
To A Co Ltd 250/-
(Being penalty deducted by
latter against bill no...
dated.....)

3) Bank Dr 750/-
To A Co Ltd 750/-
Being cheque received against
bill no.... dated..... towards
full settelement)

Deepak Goel

Deepak Goel (Expert)
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11 October 2009 Very correct exmple

Neetal Jain

Neetal Jain (Querist)
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13 October 2009 Thanks for the reply......
But where the A/c head penalty will be shown in books.As an income or accrued income??i.e. in P&L a/c or in B/S??

Plz reply

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