17 May 2010
Dear Experts I need you kind guidance in belowmentioned points.
1) what is the proper full entry for free samples distributed to create new orders/customers (the entry which affects stock as well as accounts )
2) being a hosiery manufacturer I wish to distribute 2 sweaters to my each employess on diwali ? what should be the full entry in accounts (which also effects stock)
3)if we draw a bill for the strange customer to whome we donot know and wish to receive all the money in cash lets say rs 100000.00 in one cash memo ? what are my obligation towards income tax ?
4) similarly if we purchase a capital asset in cash is it permitted in income tax if yes to which extent it is allowed?
5) One of my client started business in Computers. He purchased 100 computers from his relative for rs 1800000. The relative told him not to pay that much amount as it is in blessings from him for bright careers. What would be treatments in books of both as well as I.T. treatment in assessments
19 May 2010
Ans. 1) Prepare Sales invoice as below (W/o Tax): i)FOC (Debtors)Dr. To Sales A/c After every month Transer full balance of Free Sample Transation in FOC (Debtors)A/c balance to Free Sample(Expenses) A/c
2) Prepare Sales Invoice as below (W/o Tax) : i)FOC (Debtors)Dr. To Sales A/c After every month Transer Employee gifted balance of FOC (Debtors)A/c balance to Employee Welfare(Expenses) A/c
3)their is no problem to your side but it may creates problem to strange customer u create bill, but if your strange customer is Individual then no problem to your side.
4)You can not purchase asset in cash if will disallow if it is exceed than Rs.20000/- You have to pay tax on such amount.
5) If he purchsed it from relative then no problem of Gift tax but he have to prove relation.
Entries in ur client book: Asset A/c Dr. To Capital A/c
& in Relative books Gift to relative A/c Dr. To Asset or Sales A/c
CAclubindia
