Treatment of damaged goods

This query is : Resolved

DEVANG (Querist)
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07 May 2014 Hello,
We have issued credit note for loss of damaged goods.
Now I am confused, how it should be treated?
either
1) it is taken as normal or abnormal loss
2) it is treated as direct expenses as whatever loss is incurred it is increases our cost
3) or we have reduced sales amount.

Thanks in advance......

Sandeep Dharar

Sandeep Dharar (Expert)
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07 May 2014 1. U have to treat it as abnormal Loss.
2. Comes under trading account Credit side or u can also deduct the value from purchases.
3. No need to reduce sale. U can aso sale it as scrap.

DEVANG

DEVANG (Querist)
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07 May 2014 Sir, still I am confused,
it is treated as abnormal loss or we do not have to reduce sale amount.
But sir at the time of VAT filling sale amount will differ from actual amount as soon we do not have reduced sales.
So it is proper or not?

Sandeep Dharar

Sandeep Dharar (Expert)
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07 May 2014 Y should u reduce ur sale? If the goods r received defective then u must treat it as abnormal loss & u cant sale those goods as normal goods.

DEVANG

DEVANG (Querist)
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07 May 2014 No sir, goods are received in perfect condition but when we have sold this goods to our client, then he has claimed as damaged goods and for that we have passed his claim.

Sandeep Dharar

Sandeep Dharar (Expert)
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07 May 2014 Ok, in that case u must decrease ur sale from that amount. And no need of payment of VAT on that amount, coz if u cancel the sale then the VAT amount must also b refunded by u to the purchaser, hence ur liability to pay VAT ends only on that bill.

DEVANG

DEVANG (Querist)
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07 May 2014 Ok sir thank you for guide me.....

Sandeep Dharar

Sandeep Dharar (Expert)
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07 May 2014 Ur welcome Devang

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