Treatment of sundry creditors

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Querist : Anonymous

Querist : Anonymous (Querist)

04 July 2016 Dear Sir,

We are a company based in Dubai.Our owner has a sole proprietorship firm in Mumbai.This mumbai office brings sales to dubai office business.The mumbai office gets a 50% percentage commission .Entry is passed every year in the books of mumbai office.The other 50% is credited to Dubai office and dubai office is shown as creditors.Till now mumbai office has not realised this amount to dubai office and has accumulated in the past years and has now become a huge amount.

This year the revenue from commission is 1.7 million,whereas the sundry creditors is 7.5 million.This huge disparity is causing us trouble.Mumbai office is not in a position to settle this amount.Is there anyway to transfer this 7.5 million as capital of the owner??? or else wat can we do? Please advise

Amol S Joglekar

Amol S Joglekar (Expert)
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04 July 2016 01. 7.5 million INR is NOT a huge amount.
02. You can convert the same into Capital provided the owner is sundry creditor.
03. If company at Dubai is sundry creditor, then you can NOT convert the same into capital

Querist : Anonymous

Querist : Anonymous (Querist)

13 July 2016 The company at dubai is owned by the same owner.

Amol S Joglekar

Amol S Joglekar (Expert)
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13 July 2016 yes, you have already told that. What is your query about that?

Querist : Anonymous

Querist : Anonymous (Querist)

13 July 2016 What will be the journal entry ?

Amol S Joglekar

Amol S Joglekar (Expert)
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13 July 2016 in the books of Indian entity (Dubai entity is COMPANY...that is what you said and MUMBAI is sole proprietory firm)
debit sundry creditors
credit Capital

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