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 ?
Ateeq
(CA - Final)
(213 Points)
Replied 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).
CA Sachin Rastogi
(Audit/IFRS Manager)
(338 Points)
Replied 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
(student)
(497 Points)
Replied 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
(Account Assitant)
(27 Points)
Replied 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
(teaching)
(2046 Points)
Replied 24 April 2018
simply you can consider this as sales promotion exp
Rakesh Kumar Koul
(4 Points)
Replied 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
(298 Points)
Replied 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
Mitali
(Finance Professional)
(10526 Points)
Replied 17 October 2023
1. Accounting Entry in the Books of Mr. XYZ:
Debit (Increase in Cash/Bank): Rs. 50,000 (This increases Mr. XYZ's cash or bank balance, depending on how the cheque is deposited.)
Credit (Gift Received): Rs. 50,000 (This represents the gift received from Mr. ABC. Gift received is usually categorized under income or sundry income in the books of the recipient. It's a non-operating income)
2. Accounting Entry in the Books of Mr. ABC:
Debit (Gift Expense/Charity): Rs. 50,000 (This represents the amount given as a gift, reducing Mr. ABC's equity or increasing his expenses, depending on the nature of the payment. Gift given can be categorized as an expense, specifically under charity or a decrease in equity if the payment is made from personal funds.)
Credit (Cash/Bank): Rs. 50,000 (This reduces Mr. ABC's cash or bank balance as he is making the payment through a cheque.)
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