Invoice date and payment date

A/c entries 730 views 2 replies

Divya Garg

Director

178 Points Joined August 2011

We are a small startup company and have very less number of transactions in last financial year... due to budget issues we are doing all our accounting ourselves... and need help from CAclub experts for the same ! It will be great if experts here can help us with following questions :

1) We sent an invoice to one of our client on 28th Feb 2011 bt payment was done by client in 5th June 2012... in short, invoice date and payment date are in different financial year.

Which financial year this transaction will belong to ?

2) As we are a software company most of our clients are from outside India and our invoices are always in US $ instead of Indian Rs. So, if we send an invoice to a client today of say 1500 US$, actually payment realised in INR to our bank account will vary depending on forex rates and when payment was actually made. How will it impact the ledger ? Variation in forex in this case will lead to profit and loss in ledger ?

3) I as director of company have withdrawn cash from company bank account and made cash payment to one of our contractor for about 20k. Is this against any corporate laws ? Can we do this much cash payment ? What sort of document (invoice, payment receipt etc) we need to take from the contractos in this case ?

Thanks a lot in advance !

Divya

Replies (2)

Sumit Grover

Chartered Accountant

3652 Points Joined September 2008

Assuming that the company is engaged in service industry

1) Journal entries :

FY 2010-11

Party A/c Dr.

TDS Receivable A/c Dr.

To INcome A/c

To Service Tax Payable A/c

FY 2011-12

Bank A/c Dr.

To Party A/c

2) Assume Today's exchnage rates- 54

When the payment is received- 52

following entries shall be passed:

Today:

Party A/c Dr. 1500*54

To INcome A/c 1500*54

When payment is received:

Bank A/c Dr. 1500*52

To PArty A/c 1500*52

For booking of exchange fluctuation:

Exchange fluctuation A/c(i.e. loss) Dr. 1500*(54-52)

To PArty A/c 1500*(54-52)

3) more clarity is required for case No. 3, only then the same can be answered accordingly

Divya Garg

Director

178 Points Joined August 2011

Thanks Ankur. In case 3, I just want to know maximum we can pay to a contractors in cash ? Say in case if a contractor doesn't have a bank account or there is issue with his bank account.

Can I withdraw the money in cash from our bank account and pay to the contractor ? Do I need to get any invoice from him or payment receipt ?

Thanks,

Divya Garg