For disputed client

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

18 September 2014 I HAVE SOLD MATERIAL LAST YEAR BUT THERE WAS SOME DISPUTE WITH CUSTOMER .SO WE THINK WE WILL NOT GET AMOUNT AND NOT TAKE IN SALES REGISTERS . AND NOW HE GIVEN A CHEQUE . SO WHAT I HAVE TO DO. WHICH ENTRY CAN I PASS

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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18 September 2014 pass prior period entry in ur books

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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18 September 2014 pass prior period entry in ur books

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Nikhil Kaushik

Nikhil Kaushik (Expert)
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18 September 2014 no need to make prior period entries. You didnt book revenue as there was uncertainty regarding realization. So recognize the revenue in the current period. However, you need to ensure that stock has been properly adjusted to reflect the above.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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18 September 2014 if there is dispute then that much provison should have been made along with revenue recognition in that previous year as per as-9

Nikhil Kaushik

Nikhil Kaushik (Expert)
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18 September 2014 what if the income has not be recognised itself. for creation of provision, you are first accepting certainty of revenue. What is the revenue itself is uncertain. Provision is created for doubt about collection. So first revenue is to be created. If no revenue is created, no provision is required.

Further, the above all is applicable only for accrual basis. In cash basis, there wont be an issue anyways.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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19 September 2014 the question does not say that revenue was uncertain as sale was made of materials.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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19 September 2014 If you rwad d query sale was never recorded...the question of provision arise only after booking of sales

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CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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19 September 2014 if read the opening words it says material was sold last year but there was dispute with customer.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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19 September 2014 And what does the second line says? The impact on p&l will come from second line. And if you read my first reply it covers d material issue too.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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19 September 2014 suppose he follows accrual basis then he needs to book sales as material is already sold and make a provision for sale