Reveresal of expenses

CA Arun Chhajer (GST Faculty @ Ministry of MSME Govt of India)   (2813 Points)

01 June 2012  

I have booked expenses and pass the following entry -

Expenses A/c Dr.             1000.00

Service Tax   Dr                 103.00

                   To Creditors  A/c                 1080.94

                   To TDS                                   22.06

 

Now at the time of Finalization of Books for FY 11-12, it came to know that This creditors is no longer payable & hence require to w/off. Hence pls suggest which entry should be passed out of below two -

Here I assume that full service tax has to be reversed.

1) Creditors A/c Dr.                        1080.94

                 To Service Tax                            103.00

                To Expenses                                 977.94

 

OR

Here I am assuming that service tax should be reversed with 10.30 % of total expenses

2) Creditors A/c Dr.                          1080.94

                 To Service Tax (1080.94/110.30*10.30)     100.94

                 To Expenses   (1080.94/110.30*100.00)            980                       

 

 

Please confirm & also share the reason.