Neelesh CA Final (student) (77 Points)
21 June 2010hi , please help on yhis topic
one of our client has a dairy farm , he has 20 members
hea has accepted 1 lac deposit from each of them ,for that he will provide them 1 liter milk everyday ,
and he will not provide any interest for that 1 lac.
how to account this transaction.
YASH JAIN
(ARTICLE)
(554 Points)
Replied 21 June 2010
CASH/BANK A/C DR
TO MEMBERS ACCOUNTS
COST OF MILK A/C DR
TO CASH/BANK
PROFIT/LOSS DR
TO COST OF MILK ACCOUNT
YASH JAIN
(ARTICLE)
(554 Points)
Replied 21 June 2010
COST OF MILK = FEEDING OF ANIMALS+MAINTENANCE OF THEM+MAINTENANCE OF SHADE+ OTHER EXPENSES INCURRED BY UR CLIENT ON SAME =SOME AMOUNT
THE DIVIDE THE AMOUNT INCURRED BY THE LITERS OF MILK UR CLIENT GETS ANNUALY
SAY 200000/20000LTRS . DO NOT INCLUDE PROFIT COMPONENT SINCE UR NOT SELLING THE MILK BUT ONLY GIVING COMPENSATION FOR INTEREST FREE LOAN.
TELL UR CLIENT TO FIRST MAKE BUDGET OF ANNUAL EXPENSES AND THE MILK HE WILL GET ANNUALY AND THEREBY FOLLOW THE ABOVE PROCEDURE
Faiz Ahmed
( Article Trainee)
(1731 Points)
Replied 21 June 2010
The above deposit money of INR one lakh can be treated as deferred revenue income by dairy farm.
When it has been treated as Deferred revenue income, immediate effect will be----
Bank A/c Dr.
To Deposit from member A/c
Now upon a reasonable calculation , income in relation to milk sold to each member shall be accrued to P&L A/c from that deposit A/c. For this, entry will be---
Deposit from member A/c Dr.
To P&L A/c.
Relating to cost, it will be charged as usual. Same way , as it would have been done if sold on daily basis.
NOTE--- Assumed deposit is for supply of milk instead of collecting on daily/monthly basis.
Faiz Ahmed
( Article Trainee)
(1731 Points)
Replied 21 June 2010
If that Rupees one lakh is like a security money, then pass only one entry:
Bank A/c Dr.
To Deposit from member A/c
There is absolutely no need to account for cost aspect separately as it will be done on routine basis as and when milk is sold.
25 Hours GST Scrutiny of Return and Notice Handling(With Recording)
Survey, Search and Seizure under Income Tax Act 1961
CAclubindia
