What this entry is

 This is done when ????

we make sale or purchase of investments?????

entry is:

By Investment A/c Dr(Eg:Indiabulls)

By Service Tax A/c Dr

By Security Transaction Tax A/c Dr

By Transaction Charges A/c Dr

            To Sundry Debtor A/c (Eg: Any Person)

Replies (1)

 

 

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)

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