accounting entries.....must have a luk at that

one of our clients daily passing the entry... .postage a/c dr. to cash ....but forget to Dr. service tax....now he wants input credit...and passed the entry - service tax Dr. / To postage at the end of each month...but in my opinion it should be ser tax Dr. / To cash a/c...........pls let me know whether their entry is correct or mine..
Replies (5)
I forgot to mention this entry being passed for courier expense..

dude...when he incurs the expense, at that time he needs to pass the followinf entry:

postage A/c Dr (with postage amt without Ser. tax))

Service tax A/c Dr (with service tax amount (this wil be setoff against the output service tax))

To Bank A/c (with the amount paid)

 

jus check that the entry they have passed incudes service tax element or not...

Rohit, Your client is correct, as Debiting a nominal account means booking the expense, here he must have booked the expense incl of Serv Tax which now he is netting out of Serv Tax as he has to claim Input credit of Serv Tax

Agree with Sir

There are two ways to pass entry

Postage

Service tax

          To cash

OR

Postage

    To cash&

Service tax

      To postage

Effect will be same

both the ways can are correct..

client may chose to pass entry depending on the amount involved..

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