06 August 2011
What journal entry we should pass for valuation of closing stock so that it include excise duty.Is there need for the reversal of the same.
06 August 2011
the Journal Entry will be Closing Stock A/c Dr To Purchase A/c/Trading A/c To Excise Duty A/c (This entry is to be passed if you do not want to get the input credit of the Excise Duty paid on purchase of goods)
If u will include the amount of E.D. in closing stock then it ll automatically be reversed and u ll not get input credit of the same.
06 August 2011
For accounting purpose, closing stock should be valued at cost excluding duty. But for Income tax purpose, to comply with section 145A, duty element has to be added to the profit by an out of the books adjustment. For details u may refer ICAI publication viz, "Guidance note on tax audit.....".
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