puja gupta (Company Secretary) (74 Points)
30 August 2011Mr. A purchase 1000 units @ Rs. 100 per unit. Vat charge @ 4 %. After charging VAT he get discount of 10% on gross amount.. He will get the credit of VAT.
Please suggest me what should be inventory value, whether Rs. 1 lac (in which discount should be credited directly to the P/L A/c). or Rs. 89600/-
Thanks
Vijay
(Adamo Studio)
(2112 Points)
Replied 30 August 2011
I think value of inventory would be 90000 here.
Vijay
(Adamo Studio)
(2112 Points)
Replied 30 August 2011
Lets see
100+4%-10%= 93.6(Price after discount but including VAT-104)
So value of inventory=93.6*100/104=90/unit
so 90000
Nitika
(article)
(67 Points)
Replied 30 August 2011
I hope cost of inventory should be this
Purchase a/c ---Dr 1000*100=100000
Vat Receivable A/c Dr 100000*4%=4000
To Cash Discount A/c 104000*10% =10400
To Party A/c 104000-10400=93600
so the inventory cost will be Rs 100000/- and cash discount will directly credit to P/L account
CA Tarun Jagdish
(8893495263)
(153 Points)
Replied 30 August 2011
a) Bill Amount - 100000
b) Add VAT - 4000
C) LESS Disclount 10400
D) NET AMOUNT 93600
If Vat is refundable then it should be shown seperately. So the entry would be
Purchase a/c Dr 100000
Vat Refundable A/c 4000
To Discount Received 10400
To Bank 93600
And there fore the closing Stock will be valued at 100000.
amit mehra
(student)
(23 Points)
Replied 30 August 2011
in my opinion.....mr. A can also give debit note to the vseller n debit his/her account...n pass d following entry.....
Purchase a/c dr. 100000
Vat a/c dr. 4000
To Bank a/c 104000
amit mehra
(student)
(23 Points)
Replied 30 August 2011
n later on pass d following entry...
Party a/c dr. 10400
To Discount a/c 10400
Plz correcty if i am wrong....
thanks n regards
Vijay Korke
(Associate Finance Professor)
(21 Points)
Replied 31 August 2011
The discount received is a trade discount and not a cash discount. Trade discounts are deducted from the purchase price and not accounted for seperately. Since in the instant case the discount is given for both the basic price and VAT (which is recoverable), the entry would be as follows:
Purchases a/c Dr 90,000
(Rs 100000 less 10%)
Vat Recoverable a/c Dr 3,600
(Rs 4000 less 10%)
To Bank or Party's a/c 93,600
(depends if it cash or credit purchases)
(Also cash cannot be paid unless you want to attract the penal provisions of the Income Tax Act)
Therefore Inventory will be valued @ basic Purchases price i.e., Rs 90,000
25 Hours GST Scrutiny of Return and Notice Handling(With Recording)
Survey, Search and Seizure under Income Tax Act 1961
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