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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

09 October 2012 There is A company Called AB Limited, whose directors are A & B.
This is a marketing Company and arrange events for other companies for there launch of new product etc. Now for new product launch. A (Director) received Rs.3000000 in his personal account from XY Limited. And spend that money in arrangement of event. Expenses are booked in company account. Now how should i reflect this Rs.3000000 receipt in Books of AB Limited as it is not received in company account.

Please help me to sort this out

CA Kishore Tallam

CA Kishore Tallam (Expert)
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09 October 2012 The following entries may be passed:
For advance received by Partner in his a/c.
Mr. A A/c Dr Rs. 30 lacs
To Advance received from customers A/c Rs. 30 lacs
For Expenses:
Expenses A/c Dr
To Cash / Bank / Creditor A/c's
On Completion of event revenue to be recognised as:
Advances from customers A/c Dr
Cash / Bank / Debtor A/c Dr
To Income A/c.
Hope this is clear for you.

Arun Biyani

Arun Biyani (Expert)
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09 October 2012 note that a director is not advised to keep the company money, otherwise it may be treated as loan and advance and will attract sec 2(22) e deemed dividend of the income taxact. Now since ur director has received money and assuming he has spent whole 30 lakh for arrangement expenses, then ask him to raise a debit note on the company in his name as reimbursement of expenses for arranging the event, with all the supporting vouchers bills, thereby making him creditor in your company. make entry of Expenses Dr. and Director Cr., thereafter make the journal entry at the time he recieve money from customer director Dr. 30 L and Advance from Customer Cr. 30L, then suppose after adding profit you book revenue of 35 L, pass the entry Customer Dr. 5 L, Advance From Customer 30 and Sales 35. when u receive balance 5 L from Customer then Bank Dr. 5 L and Customer 5 L. hope it clarifies..

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Querist : Anonymous

Querist : Anonymous (Querist)

09 October 2012
Arun Biyani...

You have got what i am looking for. Please proceed further about how to raise Debit note?

CA Kishore Tallam

CA Kishore Tallam (Expert)
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11 October 2012 I feel 2(22)(e) is not applicable for advances which are given in the normal course of business and for business purposes.