Outstanding balance of Debtors

it will taken to income

ntry will b

Dr.         P/L  A/c

Cr.         Advance to customer

in tax also it will be taken as income

It will nt be income...but an exp..bal w/off.

Dear Atif

If there is any unrecoverable balance lying in debtors account then you should be debit 'sundry balance return off A/c and credit the customer.

As the entry appeared in P/L A/c it will impacted on profit also as well as tax.

rajesh ans is right one

Dear Atif

When ever you given the advance the same was shown in the Loans & advance (Current Assets). now the same has been convert in to 'Bad Debts' and should be dr in P/L a/c.

As you had paid money as advance to some one against sales. If any goods delivered him against the advance it will be consider in to sales, but there was no movement of goods and the advance is also not received back. So that it will consider as an expenses and accounted under 'Bad Debts' or ' Sundry Balance Written off"  . this will impact that the Dr balace of the debtors is now cleared.

1 At the time of Paymant of Advance

 Customer/Debtor  A/c                Dr.

              To  Cash/ Bank

2. At the time of  Written Off

Bad Debts/Sundry Balance Written off  A/c        Dr.

            To Customer/Debtor A/c

If  still teher is any confusion then you may refer the primary books of account  and also you can search the IT provision at incometaxindia.gov.in.

Rajesh

Can anybody tell me what should be the policy of amount to be written off in case where there is old credit balances of debtors i.e. advance received from debtors