Accounting entries

Following are the entries to be passed :-

Trade Receivable / Customer A/c            Dr.   120000

              To Income from service A/c                                   106800

               To Service Tax Collected A/c                                   13200

( Being Invoice for service provided booked )

Bank A/c                                                       Dr.    120000

        To Trade Receivable / Customer A/c                         120000

( Being payment received from customer )

Regards,

Devendra Kulkarni

accordignly, for the particular month as per adopted method whatever extra sale you booked you have to reverse it by -

sale a/c dr XXXX

sale in advance (current liab) Cr  XXXX 

your party account will not have any impact of your monthly closer entries. so it will get NIL when you receives payment in the month of May.

ACCOUNTING ENTRYIES AS PER DEVENDRA ARE CORRECT,  SO NOW SERVICE TAX DEPOSIT ENTRIES ARE REQUIRED WHICH LAST DATE IS 5TH OF EVERY NEXT MONTH IF YOU ARE I COMPANY ASSESSEE.

SERVICE TAX COLLECTED A/C DR.

                        TO    BANK/ CASH

(BEING SERVICE TAX DEPOSIT THROUGH CASH/BANK)

AGREED WITH DEVENDRA'S ANSWER...

I think ....

Entries suggested by Devendra are already booked by Chandrashekhar.

Now his query is , How that entire booked sale will reflect in monthly closed financial statements?

I.e the entire sale is not for the one month for which he wants to closed the books.So it should be shown?

Para 7.1 of AS-9 states that, Revenue from service transactions is usually recognised as the service is performed , either by the proportionate completion method or by the completed service contract method. 

Thus at the time of raising the invoices you cannot take the entire amount as your service income rather you should recognise it only on the proportionate basis.

At the time of invoice booking

Customer A/c Dr                                                      1,20,000

To Deferred Income A/c (Liability)                                        1,06,800

To Service tax payable A/c                                                      13,200

Month End closure entry

Deferred Income A/c (Liability) Dr                        8,900 (1,06,800/12)

To Service Income A/c Cr                                                      8,900

At the time of ST payable

Service tax A/c Dr                                                    13,200

To Bank A/c                                                                             13,200

At the time of receipt of cash

Bank A/c Dr                                                              1,20,000

To Customer A/c                                                                    1,20,000