Excise duty provision.
This query is : Resolved
02 July 2008
At the end of the financial year we have some quantity of finished stock. For valuation of finished stock excise duty is not added.
I know that on the finished stock provision for excise duty is to be made as liability arises as soon as the manufacuting is completed BUT payment is postponed to the date of delivery of stock to customer.
My question in this regard is :
1)What is the journal entry that needs to be passed on 31 March for making provison of excise duty?
2) Should the amount of debit entry suggested in above journal entry be added to the closing finished stock?
3)What is the journal entry to be passed in the next year to reverse the provision?
4)Should any disclosures be made in notes to accounts in above scenario?
I request the caclub member who are in manufacturing industry or have done audit of manufacturing industry to please answer my above questions.
Please answer questionwise. Thanks.
I know that on the finished stock provision for excise duty is to be made as liability arises as soon as the manufacuting is completed BUT payment is postponed to the date of delivery of stock to customer.
My question in this regard is :
1)What is the journal entry that needs to be passed on 31 March for making provison of excise duty?
2) Should the amount of debit entry suggested in above journal entry be added to the closing finished stock?
3)What is the journal entry to be passed in the next year to reverse the provision?
4)Should any disclosures be made in notes to accounts in above scenario?
I request the caclub member who are in manufacturing industry or have done audit of manufacturing industry to please answer my above questions.
Please answer questionwise. Thanks.
03 July 2008
There is no need to pass any journal entry but u need to add the excise liability to the finished stock .
03 July 2008
I think if excise duty is payable to excise department an credit entry has to be there in the books of accounts as provision for excise duty or excise duty payable. What is the rationale behind adding just the excise duty amount to the finished stock?
I request other experts to express their views on this.
Thanks
I request other experts to express their views on this.
Thanks
01 December 2010
The journal entry should be passed
01 December 2010
Increase/(decrease) in excise duty on closing stock of finished goods A/c debited and Excise Duty Payable on Closing Stock of Finished Goods will be credited
01 December 2010
yes. the amount of total excise duty. Not only increase/ (decrease). will be added to the Closing Stock
01 December 2010
No entry needed to be passed in the next year. Just think with concentration about my entry in point 1. You will get the effect of it in the next year also
01 December 2010
in notes to accounts , only the total excise duty during the year and previous year is disclosed. But, this amount will be shown in 3CD annexure
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