Adjustment entry

This query is : Open

Guest

Guest (Querist)

02 December 2013 Can u please advice me regarding the case where payment is made by the debtor on behalf of the company to the creditor.eg Company purchased from A and makes sales to B.Now B is making payment to A on behalf of the company.Company passed the following adjustment entry

Creditors A/c Dr.
To Debtors A/c

Is there any Tax implications involved in the above case ??if yes what would be the consequence??Please do reply your views at the earliest.

Manish Bhandari

Manish Bhandari (Expert)
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02 December 2013 Document the above entries with supporting as the instructions to debtor to pay durectly to creditor as any settlement advice. Also a confirmation form creditor as to receipts on companys behalf from the debtor.
If transaction is proved genuine then no Tax implications. Also the amount outstanding of debtor should be justified.