Treatment of overbilling

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CA.Aman Dugar (Querist)
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19 June 2008 A company billed a customer with higher amount.Income a/c as well as Debtor(Customer)A/c were posted with higher amount.2 years later the company realises the mistake.What should be the accounting treatment now?

CA Vivek Jain

CA Vivek Jain (Expert)
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19 June 2008 reverce transaction with difference amount and book income

CA.Aman Dugar

CA.Aman Dugar (Querist)
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20 June 2008 Income was already booked at higher side, so now how can i book the income again?

CA.Aman Dugar

CA.Aman Dugar (Querist)
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20 June 2008 Please answer..

CA Anand Sarda

CA Anand Sarda (Expert)
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20 June 2008 pass the following entry

p/l A/c ....Dr
to Sundry Drs A/c

CA.Aman Dugar

CA.Aman Dugar (Querist)
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23 June 2008 Instead of P&L, which expense account i should Debit? Whether Bad Debts is justifiable from Income Tax point of view, bcoz just bcoz i booked him as my debtor it was not my debtor in actual.
Can it be booked as prior period item since it is a rectification of mistake of earlier year..

Chintan Gajjar

Chintan Gajjar (Expert)
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24 June 2008 Dear Sir,
You may refer AS-4. I.T. Dpt. will disallow if you show as Prior Period Items. SO the best option is to show as Sales return (It may create problem as its after 2 year). But there is no better option.

Regards,
Chintan.

CA.Aman Dugar

CA.Aman Dugar (Querist)
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26 June 2008 Can u please elaborate why it cannot be booked as Prior period expense.Since it was advertisement income it cannot be booked as sales return. Suggest me an alternative.Please..........

Chintan Gajjar

Chintan Gajjar (Expert)
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27 June 2008 Dear Sir,
How can you trat sales Return as Advertisement Exp?
Prior Period Items are disallowed by Income Tax Dept.

Regards,
Chintan

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