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Hitesh (Prop.)     10 October 2011

How to pass entry for received gift

One of Client  Mr. XYZ is received Cheque of Rs. 50000/-  As Gift from Mr Abc.

How to Pass the accounting entry in the books of XYZ  & Mr ABC  Under Which group ?



 7 Replies

Ateeq

Ateeq (CA - Final)     10 October 2011

You may pass the entry as follows: -

In the books of Mr. Xyz: -

1. If the amount is invested in the business then as follows

Bank A/c Dr.

        To Capital A/c

(Being gift received from Mr. Abc is invested in the business)

2. If the amount is not invested in the business then there will be no entry.

In the books of Mr. Abc: -

1. If the amount is gifted for the concerned business relationship then

Business Promotional Exp. A/c Dr.

        To bank A/c.

(Being amt paid towards .................)

2.    If the amount is gifted for the personal reasons then

Drawings A/c     Dr.

         To Bank A/c.

(Being amt paid towards .................)

(Note: - Headings can be altered suitably).

2 Like
CA Sachin Rastogi

CA Sachin Rastogi (Audit/IFRS Manager)     11 October 2011

Gift in Kind in the books of receiver

Further, if you receive a gift in kind and the same is used in the business then you should do the fair value of that gift item and record the same by giving a credit to capital account.

Gift in Kind in the books of donor

In this case, the donor will credit the relevant asset 's carrying amount and take the second effect as loss in its income statement as if it is sold at zero value.

FUTURE CA

FUTURE CA (student)     17 February 2014

The entries in the case mentioned by you will be as follows:

1. In the books of XYZ

   a) Bank A/C Dr. 50000

        To Gift Received A/C 50000

   b) Gift received a/c Dr 50000

         To Profit and loss a/c  50000

2. In the books of ABC

   a) Miscellaneous Expenses/Business promotion Expenses A/C Dr 50000

              To Bank A/c                                                                                50000

   b)  Profit and loss a/c dr 50000

             to bank a/c                  50000

 

Disclaimer : The above entries are as per my opinion. There could be other views either conceptually or otherwise. The entries may be passed with suitable narration according to the situation and the names of the account heads should also also be considered keeping the actual situation in mind, which may be different from the account heads as shown above. No responsibility/accountability shall be taken by me for the entries passed above. Feel free to use your own analytical faculties of mind/discretion in either accepting/rejecting the journal entries and other incidental/related information.

Shital Kadave

Shital Kadave (Account Assitant)     23 April 2018

Our firm is Propriotership, we buy one mobile phone to gift client, but mobile company raised bill in the name of client. how to pass entry in tally 

satish

satish (teaching)     24 April 2018

simply you can consider this as sales promotion exp

Rakesh Kumar Koul

Rakesh Kumar Koul   11 January 2021

how to make entries regarding Transfer entry in the bank by Xyz and comes under which head as per accounting but is not a liability

Ayushi Arora

Ayushi Arora   27 February 2021

There will be two entries, one will have the 

 

1. In the books of XYZ    a) Bank A/C Dr. 50000      

  To Gift Received A/C 50000    b) Gift received a/c Dr 50000        

  To Profit and loss a/c  50000 2. In the books of ABC

   a) Miscellaneous Expenses/Business promotion Expenses A/C   Dr 50000            

   To Bank A/c         50000  

b)  Profit and loss a/c

dr 50000              to bank a/c                  50000

 


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