Advances written off
This query is : Resolved
21 March 2013
We are a automobile manufacturing company.
We purchase parts from various vendors and also have capital contracts with them.
We sometimes pass debit entries due to warranty debit, purchase returns or when advances are paid.
In case there is no further billing from any vendor the account shows debit balance.
Similar is the case when vendor doesn't come to us to receive his pending amount.
In above type of cases we usually write off old vendor balances in a single account miscellanous income. I mean we wrtie off Dr balance and Cr, balance in single account.
Please advise if this is allowed as per act. If not then please quote section..
We purchase parts from various vendors and also have capital contracts with them.
We sometimes pass debit entries due to warranty debit, purchase returns or when advances are paid.
In case there is no further billing from any vendor the account shows debit balance.
Similar is the case when vendor doesn't come to us to receive his pending amount.
In above type of cases we usually write off old vendor balances in a single account miscellanous income. I mean we wrtie off Dr balance and Cr, balance in single account.
Please advise if this is allowed as per act. If not then please quote section..
21 March 2013
These should be written off from profit & loss account ..
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