Round off

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 October 2013 I PURCHASE GOODS FROM DEALERS & RECEIVE INVOICES FROM THEM.THE INVOICE AFTER CHARGING VAT & VALUE OFTEN ARE ROUNDED to Zero. I WOULD I LIKE TO ASK HOW TO SHOW THIS ROUND OFF IN BOOKS OF ACCOUNT. WHAT WILL BE THE ENTRY & NARRATION .Will this round off be transferred to purchase a/c. During sales also We make round off to Zero. How round off ( sales) & round off (purchases) will be maintained. What will be entrie & narrations both for Round off (purchase) And Round off (sales).I ALSO MAINTAIN ONE ROUND OFF ACCOUNT FOR ROUNDING TO ZERO FROM PARTIES RECEIVED OR PAID LESS. How this account will be maintained. will all Three accounts will be maintained separately. Please help me as I want to maintain accounts with perfection.

Ganeshbabu K

Ganeshbabu K (Expert)

13 October 2013 Not Required to maintain 3 accounts..Just create a ledger "Round off" under Indirect Expence and adjust rounding off with that ledger...by debiting/crediting round off account
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if at the end of year if it is credit balance it is Non-operating indirect income ,,if net result at end of year is debit balance it is grouped as miscellenous expences

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Querist : Anonymous

Querist : Anonymous (Querist)

13 October 2013 HOW ENTRY WILL BE MADE AND WHAT WILL BE THE NARRATION for round off made for sales,purchases and payment given Or received less.Please explain by showing entries & narrations with examoles.at the end of year what will be adjusting entries & narration. I expect yr reply soon

Ganeshbabu K

Ganeshbabu K (Expert)

13 October 2013 1)Suppose Purchase invoice 5.7(4+1.7vat)rounded to 6
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Dr.Purchases A/c 4
Dr.Input vat creditA/c 1.7
Dr.Round offA/c 0.3
Cr.SupplierA/c 6
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In the same way for sales.(Assuming same example)
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Dr. CustomerA/c 6
Cr.Sales A/c 5.7
Cr.Round offA/c 0.3
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Round off account can be treated as indirect income...net result of round off account(after credits&debits to round off account)is Dr balance then it is treated as miscellenous expences in financials if it is credit balance treated as miscellenous income or non-operating indirect income in financials

Querist : Anonymous

Querist : Anonymous (Querist)

13 October 2013 THANKS ALOT . SUPPOSE WE RECEIVE .80p less from our customer in total bill of RS20090.80p by cheque of RS20090/ what will be entry of rounf off & narration for .80P receives less.

Ganeshbabu K

Ganeshbabu K (Expert)