Journal entry

What is the journal entry for goods sold for free of cost as complyment for sales done in tally? should VAT include in the cost?

Thanks in advance for all your replays.

T.S.Mohana Harish

Madurai

harishca1984 @ gmail.com

Replies (2)
entry should be Goods distributed as free sample.. Dr To sales. Yes Vat may be applicable.

Journal Entry:-

         Free Samples A/c  Dr.                 Cost  + VAT amount

                To VAT Receivable                                      VAT Amount

                 To Purchase  A/c                                        Cost

Remember as per VAT laws if an item purchased on which Input tax credit has been paid & enterprise use that goods for manufacturing of Non- taxable Goods or Exempt Goods or distributed as free samples 

then the VAT receivable amount recorded at the time of purchase to the extent which has now been given as free Samples shall be reversed.

 

That is why i mentioned " VAT Receivable A/c" instead of " VAT Payable A/c"

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