Ad-Free CAclubindia and Daily Updates on your mobile. Subscribe Now!

ADVANCE PAID TOWARDS PURCAHSE OF PLOT

sayad (Executive) (195 Points)

21 September 2024

WHAT WILL BE JOURNAL ENTRY FOR THE ADVANCE PAID TO THE SELLER TOWARDS PURACHSE OF PLOT AND UNDER WHAT HEAD IT SHOW BE SHOWN

Reply
Follow
Share

9 Replies

prasad Nilugal ( GST Practitioner & Accounts ) (14654 Points)
Replied 21 September 2024

Advance to Seller A/c Dr
To Bank A/c Cr
( Advance to seller for purchase of plot)

Advance to Seller A/c , under Loans & Advances, Asset Side Balance Sheet. ( I hope plot is for business purpose)

Upgrade to CAclubindia Pro. Subscribe Now!

sayad (Executive) (195 Points)
Replied 23 September 2024

not for business but for personal plot

prasad Nilugal ( GST Practitioner & Accounts ) (14654 Points)
Replied 23 September 2024

Is it a Sole proprietorship ?.

sayad (Executive) (195 Points)
Replied 23 September 2024

YES ITS SOLE PROPRIETORYSHIP

prasad Nilugal ( GST Practitioner & Accounts ) (14654 Points)
Replied 23 September 2024

So , money paid from business to purchase personal plot , is it Correct ?.

Upgrade to CAclubindia Pro. Subscribe Now!

sayad (Executive) (195 Points)
Replied 24 September 2024

YES THE AMOUNT IS PAID FROM BUSINESS

prasad Nilugal ( GST Practitioner & Accounts ) (14654 Points)
Replied 24 September 2024

Are going to show this plot , as an Fixed Asset or Non Current Asset in your Sole proprietorship Balance sheet ?.

sayad (Executive) (195 Points)
Replied 24 September 2024

IT WILL BE SHOWN AS FIXED ASSET

prasad Nilugal ( GST Practitioner & Accounts ) (14654 Points)
Replied 26 September 2024

As per AS 10 ( Accounting Standards) , If plot is solely for personal use then you Can not show as fixed asset in the Balance sheet , (please refer AS 10) , So amount withdrawn from business to purchase personal plot will treated as Drawing, and will be debited to Capital Account.

Drawing A/c Dr
To Bank A/c Cr
( amount withdrawn from Business for personal purpose)

Capital A/c Dr
To Drawings A/c Cr
( Drawings transfer to Capital account)

Take more opinion on this.