Journal entry required

If client demand for 100% credit for this transaction (sales return) then

Sales Return A/c Dr        230354/-           (pls bifurcate this entry as you did not mention the tax amount)

To Client   Cr                              230354/-

Then record a entry for damage of said stock

Damaged Stock Dr         220354/-

To Closing Stock  Cr            220354/-     (Select the stock item which has been got damaged)

Originally posted by : Harpreet
	If client demand for 100% credit for this transaction (sales return) then   Sales Return A/c Dr        230354/-           (pls bifurcate this entry as you did not mention the tax amount) To Client   Cr                              230354/-   Then record a entry for damage of said stock Damaged Stock Dr         220354/- To Closing Stock  Cr            220354/-     (Select the stock item which has been got damaged)

agreed

as there are two transactions 

1) conversion of sold goods into scrap

2) credit note in favor of buyer

for credit note the entry is correct.

for conversion of sold goods into scrap pass  the value with the value of scrap generated aginst damaged goods

viz

1)

Damaged Stock Dr         220354/-

To Closing Stock  Cr            220354/-     (Select the stock item which has been got damaged)

2) Scrap a/c dr ................10000

to Damaged stock ......cr ..............10000

this will resolve the prob

Grouping of Scrap or Damage Stock (IInd Entry) should be Indirect Expense, so the P & L A/c finally got hit as you were asking about P&L.