Atharv Sankliya (1306 Points)
05 May 2023
Yasaswi Gomes new
(Finance )
(4484 Points)
Replied 06 May 2023
Yes. It will be recorded as per variable cost principles..I've
Dr. Purchases
Cr. Cash
And
Dr. Inventory
Cr. Income statement(closing inventory)
So when purchases is not there, the closing inventory cannot offset it. It automatically becomes gain. But somehow we have to demistify acca that cos sales method does offset closing inventory. So when it is off set it is offset mathematically.
Now leaving it. The distributor will report it as
Dr. Inventory
Cr. Promotions
sabyasachi mukherjee
(26126 Points)
Replied 06 May 2023
Yasaswi Gomes new
(Finance )
(4484 Points)
Replied 06 May 2023
I mean to say is acca interprets closing inventory as offsetting purchases for the period. But it is offset by every line item which is convenient for me because fifo already calculated the closing inventory accurately. So my entries are real
Yasaswi Gomes new
(Finance )
(4484 Points)
Replied 06 May 2023
No way. Who ever they are they must invoice under new gst act. They are eligible to be convicted. Even stock transfers must recorded.
Yasaswi Gomes new
(Finance )
(4484 Points)
Replied 06 May 2023
Ok! I made mistake again. But the accounting entry will be what I prescribe!!
GST is applicable when a transaction involves the supply of goods/services for consideration. Goods or services that are supplied free of cost (without any consideration) cannot be treated as ‘supply’ as per Schedule I of the CGST Act, 2017 except on activities specifically mentioned on which GST needs to be charged even when supplied without consideration. Section 17(5)(h) of the CGST Act, 2017 restricts ITC on goods disposed off by way of gift or free samples. Thus, ITC has to be reversed on goods distributed as free samples.
Now tax accountant must work around me to reduce the burden on reporters
Yasaswi Gomes new
(Finance )
(4484 Points)
Replied 06 May 2023
Variable consideration must include this issue.
Yasaswi Gomes new
(Finance )
(4484 Points)
Replied 06 May 2023
This transaction is equal to internal goodwill. Who said tax compliance comes into reporting?
Yasaswi Gomes new
(Finance )
(4484 Points)
Replied 07 May 2023
No i have complaint on as 26. Internally generated good will or externally generated im confused. Guess its internal. But dont worry cause none of this crap is necessary even at a cfo level..
Atharv Sankliya
(1306 Points)
Replied 07 May 2023
Yasaswi Gomes new
(Finance )
(4484 Points)
Replied 08 May 2023
After i made a lot of free sample wromg answers, i gor to know this gst act.
You have to read the gst. Its not taxed. But entries are real. Eg. You want to sell the free smples received
Dr. Inventory
Cr. Promotions account
If you want to give thw free samples to employees
Dr. gift expenses
Cr. Promotions expenses.
See you dont need an invoive because its not taxed i guess.
https://www.financestrategists.com/accounting/general-journal/journal-entry-for-distribution-of-goods-as-free-samples/
Yasaswi Gomes new
(Finance )
(4484 Points)
Replied 08 May 2023
Pass purchase entry of Sanitizer with GST as follows 1) Purchase A/c Dr CGST A/c Dr SGST A/c Dr To Sundry Creditors A/c Cr ( Purchase of Sanitizer , Invoice No ---- Dated ----) 2) When pay for above purchase Sundry Creditors A/c Dr To Bank A/c Cr ( payment made with Gst to supplier ) 3) when you distribute Same Sanitizer as a Free Sample entry will be Free Sample ( Sanitizer ) A/c Dr To Purchase A/c Cr ( Being Sanitizer Distributed as free sample ) Note - No Input Tax credit For Free Sample as per section 17(5) (h) of CGST act 2017 , if you have taken credit please reverse . Also refer circular no 92/11/2019 dated 7/3/2019 Gst on free Sample @ prasad nilugal wrote this answer. And he usually gets all entries right. If supply is free, why to record purchases. Even if you recognise it, youll have to derecogniae it. So that mens je didnt receive purchase for free. But purcjased it and distributed it for free
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