WE ARE A CEMENT DEALER. OUR SUPPLIER ISSUES INVOICE FOR CEMENT @ 400 PER BAG I.E. OUR PURCHASE PRICE PER BAG IS RS. 400. AND THEN ISSUES "CREDIT NOTE WITH GST" AGAINST VOLUME / TARGET ACHIEVED @ 10 PER BAG.
IT ALSO ISSUES "CREDIT NOTE WITHOUT GST" FOR RATE/PRICE REDUCTION @ 30 PER BAG.
IT IS A GENERAL PRACTICE IN CEMENT BUSINESS.
AND WE SELL CEMENT @ 370 PER BAG.
AS I UNDERSTAND "CREDIT NOTE WITH GST" AGAINST VOLUME / TARGET ACHIEVED ARE TRADE-CREDIT NOTES.
AND "CREDIT NOTE WITHOUT GST" FOR RATE/PRICE REDUCTION ARE COMMERCIAL-CREDIT NOTES.
PLEASE LET ME KNOW, I AM CORRECT OR NOT IN UNDERSTANDING THE TYPE OF CREDIT NOTE ?
IN TALLY, I AM PUTTING BOTH THE CREDIT NOTES AS "DISCOUNT WITH GST" AND "DISCOUNT WITHOUT GST" - UNDER HEAD "INDIRECT INCOME".
IS THIS THE CORRECT ACCOUNTING TREATMENT ?
IN THIS SITUATION, MY GROSS PROFIT IS ALWAYS NEGATIVE (I.E. GROSS LOSS), AS SALES PRICE (370) - PURCHASE PRICE (400) = LOSS (30).
BUT NET PROFIT IS AWAYS POSITIVE [-30 (GL) +10 (DISCOUNT WITH GST) + 30 (DISCOUNT WITHOUT GST) = 30].
IS MY TRADING AND PL OKAY ?
CAN "CREDIT NOTE WITH GST" BE PUT UNDER HEAD "PURCHASES" IN TALLY ?
CAclubindia
