Sr Executive Finance
845 Points
Joined March 2008
at the time of purchase of investment as investments are company's asset
and taxes paid are expenses......(only in cases where company is not engaged in purchase /sale of investments on regular basis i.e investment activities are not the part of ordinary business activities of the company).........
as the investment is purchased from a person (hereinafter referred as creditor) and taxes and other expenses are incurred by that person on behalf of the purchaser..........
in your presnt case you are giving credit to sundry debtor that reflects that any amount was receivable from him..(i.e. from seller ..)...and later on an investment aws purchased from him and taxes and other expenses are either paid by him or recovered from him(i,.e. from his dues)
example:
Mr A a debtor of company has an outsatnding balnce of Rs. 10,000 Dr. in the books of the comapny....
Comapny purchased an investment from Mr A (debtor) costing Rs. 4,000 and Service Tax 413 STT Rs. 100 & transaction charges are Rs. 15 are incurred.
All these taxes and expenses incurred on the transaction of purchase of investment are to be adjusted against dues recoverable from him...(not in full adjustment)..
then entry in such case will be:
Investment A/c Dr. Rs. 4,000
Service Tax A/c Dr. Rs. 413
STT A/c Dr. Rs. 100
Transaction Charges A/c Dr. Rs. 15
To Mr A (Debtor) A/c Rs. 4528
(narration)
---------------------------------------------------------------------------------