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Accounting Entry

Bijoy (Working ) (127 Points)

20 December 2010

Hi Friends,

Eg:- Suppose Mr A. Provide professional service to Mr.B.

Kindly tell me that what will be the entry for the above transaction on both the books (ie:- Treatment of service tax while sending invoice to Mr. B and TDS while making payment to Mr. A)

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9 Replies

Ranjith kumar (CA Final ) (78 Points)
Replied 20 December 2010

HI Bijoy,

entries as follows,

In the Book of Mr.A
S.No	Particulars	Debit	Credit
Invoice Entry
1	Mr.B a/c Dr	110
	To Professional Income A/c		100
	To Service Tax payable A/c		10

Receipt Entry
2	Bank A/c Dr	100
	TDS on Sales A/c Dr	10
	To Mr.B A/c		110

Duties payable
3	Service Tax payable A/c Dr	10
	To Bank A/c		10


In the Books Of Mr.B
Invoice Entry
	Legal & Profession a/c Dr	110
	To Mr. A A/c		110

Payment Entry
	Mr.A a/c Dr	110
	To Bank A/c		100
	To TDS on profession a/c		10

Regards,

Ranjith

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Madhusudan Kabra (knowledge seeker) (1779 Points)
Replied 20 December 2010

Originally posted by : Ranjith kumar
	HI Bijoy, entries as follows, In the Book of Mr.A S.No Particulars Debit Credit Invoice Entry 1 Mr.B a/c Dr 110 To Professional Income A/c 100 To Service Tax payable A/c 10 Receipt Entry 2 Bank A/c Dr 100 TDS on Sales A/c Dr 10 To Mr.B A/c 110 Duties payable 3 Service Tax payable A/c Dr 10 To Bank A/c 10 In the Books Of Mr.B Invoice Entry Legal & Profession a/c Dr 110 To Mr. A A/c 110 Payment Entry Mr.A a/c Dr 110 To Bank A/c 100 To TDS on profession a/c 10 Regards, Ranjith

Bijoy (Working ) (127 Points)
Replied 20 December 2010

Hi,

Then what will be the effect of TDS on Sales in Balance Sheet.

Ranjith kumar (CA Final ) (78 Points)
Replied 20 December 2010

In the year end Finalisation, we have adjusted TDS on Sales to income Tax

Income Tax for FY 10-11 A/c Dr 10

To Tds on Sales A/c 10

Bijoy (Working ) (127 Points)
Replied 20 December 2010

Thanks Ranjith,

One more Question?

Incase TDS and SErvice tax rate is different then amount will be different. Then please explain the above example once again with ST on 10.3% and TDS on 5%.

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Ranjith kumar (CA Final ) (78 Points)
Replied 20 December 2010

In the Book of Mr.A
S.No	Particulars	Debit	Credit
Invoice Entry
1	Mr.B a/c Dr	110.3
	To Professional Income A/c		100
	To Service Tax payable A/c		10.3

Receipt Entry
2	Bank A/c Dr	104.785
	TDS on Sales A/c Dr	5.515
	To Mr.B A/c		110.3

Duties payable
3	Service Tax payable A/c Dr	10.3
	To Bank A/c		10.3


In the Books Of Mr.B
Invoice Entry
	Legal & Profession a/c Dr	110.3
	To Mr. A A/c		110.3

Payment Entry
	Mr.A a/c Dr	110.3
	To Bank A/c		100
	To TDS on profession a/c		5.515


Year End Posting
	Income Tax for FY 10-11 A/c Dr	5.52
	To Tds on Sales A/c		5.52