Accounting entry

1. I think you can have separate accounts for customs duty and port charges under Indirect expense
2. When you pay customs duty and port charges, you debit the expense account and credit bank/customs
3. When the same is recovered from importer (client) via debit note, credit the same to the respective expense account and debit the client a/c
4. The net effect of expense account will be zero for payments made on behalf of clients

but ultimately  my P/L a/c will increase by heavy exp which is not really my exp...while the revenue will increade by only the amount of service receivable...?????? reply

by the way ..thanks

How will it increase if you follow what I suggested?

For example (paid customs duty on behalf of client)

1. Payment to customs: Customs duty Dr......To Bank/Customs a/c
2. Recovery from customer: Customer Dr ......To Customs duty

If the above is done, the net effect of customs duty a/c would be zero.

u already said that custome duty under indirect exp and indirect exp comes under P/L A/c

So what? Net effect of expense account is zero. If so, final balance in P&L a/c is also zero with respect to that account.

and there is no logic to show it as own Exp which is really not our....i appreciate you..atleast u replied..plz confirm ...i am waiting......

Logic is very much there because you yourself have said that it is reimbursement of what you have paid. If you have incurred expense, that can only be reimbursed in this case. Meaning of reimbursement: https://dictionary.reference.com/browse/reimbursement

verb (used with object), reimbursed, reimbursing.

1.to make repayment to for expense or loss incurred:

The insurance company reimbursed him for his losses in the fire.

2.

to pay back; refund; repay.

......dear

to make repayment to for expense or loss incurred:.....what i am getting ...making repayment for exp....incurred= reimbursment....here it is exp for the person who is making payment..and not the person who is being reimbursed....and plz consult from someone....

what i am getting u have never done a/c entry relating to my question..

u r giving reply on ur own logic only..

Dear Varun,

All sums paid on behalf of clients needs to be taken to Advances recovarable be it duty or port charges under the head Debtors if it is likely to be reimbursed. for a better understanding you may have two ledger, duty receivable & port charges receivable under the group for a better clarity.Since taking to profit and loss account may result in a inflated situation on both exp and revenue if it is not  closed within the financial year,and moreover it is not our expenses  to be booked as you rightly suggested.

if you feel that reconcilation process would be hard if there is  more transactions on reimbursement, a healthy practice would be debiting the party account when the expenses in incured and credited on reimbursement. This would avoid unneccessary monitoring of sub ledgers created. and any short or excess recovery would be factored in the party ledger itself.

But beware, the act has been amended and any reimbursement of taxable services is liable for service tax whether raised by debit notes even on cost to cost basis. ( now receipt of consideration for a taxable service is under the purview of the definition service.)

Hope your doubt is cleared.