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Entries and documents to be maintained

Sunny Jain (Oops) (35 Points)

19 August 2011

Hello Sir,

I am in jewellery Retail business. As we buy old jewellery from customer of different qualities...and then we turn them into bullion after paying some labour fees. Due to which our bullion stock increases... Now plzz guide me..

1. Does i hav to maintain any separate stock register for the old jewellery of different qualities purchased from customer at different rates.

2. what r the accounting entries to be made...while purchasing old jewellery from customer

3. Does i hav to issue any document to the customer for purchase of old jewellery...

4. what extra book keeping and documents r to be maintained by me for using the old jewellery turned into bullion and to be used in my stock.

Waiting for ur Positive reply...

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8 Replies

Sunny Jain (Oops) (35 Points)
Replied 27 August 2011

is there no body who can solve my query....

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CMA Shilpa Shinde (COST ACCOUNTANT) (217 Points)
Replied 27 August 2011

Dear Sunny, Yours seems proprietorship business (not clarified). Though, Depends on the Turnover of your retail business, stat & tax audit applicable, it is always good to keep the records of transactions.

On considering above, you may keep records like

1) Inventory (Stock) of Old Jewellery (Raw Material)bought by you. (also Financial year Starting & ending period Opening and Closing stock)

2) Labours used in terms of Hrs/ Piece work payment basis for conversion of Old Jewl to Bullions.

3) Total input and Out Put (Gold Grade Wise) in terms of Quantity in units as well as in percentage of output to Input.

4) Other related Machinery/ Jobwork charges (if out sourced) applicable to above process.

5) The above can be used to estimate the cost incurred for Bullion and so the profit/margin.

6) For Sale of Bullion sales invoice and applicable sales tax records.

7) There are number of Jewellery Accounting Softwares available in mkt., which make above easy.

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Sunny Jain (Oops) (35 Points)
Replied 27 August 2011

First of all thanks for guiding me ..Shilpaji..

Now...Yes it is partnership firm. And i am using Accounting software Busy to maintain accounts...

Now plzz also guide me

1. what r the accounting entries to be made in daybook...while purchasing old jewellery from customer

For eg 25th aug 2011

Sold 25 gm gold ornament 92 hallmarked to customer @ 2700pgm = 67500

vat @ 1.05 including add cess 5% on vat = 709

Total sale =68209

Now also purchased 20gm gold ornament (old jewellery) from customer @ rs2500 of different quality 80% = 50000

now plzz.. tell

1. Whether i hav to make any purchase entry...if yes what will be the entry for purchase and vat entry from customer in my daybook...

what will be the treatment of vat while purchasing...whether i hav to show vat on it while purchasing from customer..

and

2. what r the sale tax rules and documents needed ( Site link will also be helpful) to become a jewellery valuer...who can purchase old jewellery from customer, if customer wants to show it in his in individual for the capital gain he got..on selling jewellery. What r the billing documents i give to him for record....related to it.

Waiting for ur positive reply...

Sunny Jain (Oops) (35 Points)
Replied 29 August 2011

Waiting for ur reply......ji

Sunny Jain (Oops) (35 Points)
Replied 05 September 2011

Is no body able to answer my this query....

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sharma.ctc@gmail.com (Sr Manager-Acs & Fin) (423 Points)
Replied 05 September 2011

Dear Sunny,

You have not mentioned your location, so it will not be possible for us to answer on the VAT query you have as the VAT rules differ state to state.

Now coming on the query of Accounting Entry of your transaction..

1st Entry: -

Customer / Cash A/c. Dr. 68209/-

To. Sales A/c. 67500/-

To. Output Vat A/c. 709/-

(Being sale of 25gm gold jewellery 92 Hallmarked)

2nd Entry: - (If VAT if not applicable in purchase of goods from unregistered dealers)

Purchase A/c. Dr 50000/-

To. Cash / Sundry Creditors 50000/-

(Being purchase of 20gm of old jewellery)

2nd Entry: - (If VAT is applicable in purchase of goods from unregistered dealers)

Purchase A/c. Dr 50000/-

To. Cash / Sundry Creditors 50000/-

(Being purchase of 20gm of old jewellery)

Input VAT A/c. Dr. 525/-

To. VAT Payable Cr. 525/-

(Being VAT Payable on purchse of 20gm of old jewellery from unregistered dealers)

Hope you will find it useful ....

Lets see what other expert have to say on this...

Sunny Jain (Oops) (35 Points)
Replied 05 September 2011

I am from state haryana ....Sir

now plzz tell ...is this vat amount is to be paid to the customer (who is playing the role of creditor here at the time of purchase of old jewellery) or i directly pay to the govnment.

Anurag Sharma (6 Points)
Replied 21 June 2016

Hello Sunny,

See VAT is of 2 types

1. Which you have to pay at the time of purchase to the creditor and

2. Which you collect from customer by sale

The difference amout is to be paid to the government or it is carry forward.

If VAT on purchase is more than the VAT on sale the difference amount is to be carry forward on the other hand if VAT on purchase is less than VAT on sale the difference amount is to be paid tho the government.

Hope its clear now.

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