Accounting of Discount given to retail customers

A/c entries 1566 views 1 replies

Dear Friends,

I have worked with an Automobile Dealer. The nature of their business was resale of vehicles, spare parts and servicing of vehicles.

The problem that i had faced there that e.g. a vehicle is sold for Rs.4,00,000/- and a retail invoice for the same amount is made.The sale is on credit basis. The customer paid some money on the spot and remaining in 2 or 3 months. Let the customer pays total 385400/- and get the original documents from the dealer.For this amount the dealer gives no reciept to him.(The customer is satisfy, since he has got the original documents). Later on the cash reciept is made for Rs. 370000/- and we are ordered to put the balance amount in cash discount. You must have understood why? Isn't it a fraud ? Is it legally possible to pass such an entry. How the VAT will be calculated on such type of transactions?

Please reply my querry and if possible, please explain how can and under what cicumstances, we can allow cash or trade discount and how VAT will be calculated on such transactions?

Waiting for your replies

Ajay Kumar.

Replies (1)
As an accountant you can make the entry. The Problem arises only when there is a scrutiny or a raid. There also you dont have to worry. the bosses "handles" all, (unless he flees). But as an individual, its soul killing to wake up every morning and to know that what you are doing is a part of a fraud.


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