vinayak c. chavan (CPT passed) (1011 Points)
23 May 2012How should i book personal expenses of Director in Pvt.Ltd. comapny books? Directoir is making payment of these expenses buy his credit card. Payment of credit card is done thourgh company accounts. Should i book only payment entry of credit cards or i have to book journal entry for expenses also.
Anshul Mittal
(Freelancing)
(741 Points)
Replied 23 May 2012
If you are able to identify the personal transactions,, than charge it to his personal A/C,,,
otherwise,,, what we do in companies is--- we take all the expenses from credit cards,,, identify the personal expenses,,, like "purchase of b'day cake",, but expenses like "hotel expenses",, may be for a meeting so,,,we total all expenses and charge 1/10t hto directors personal account(as per income tax act)....
in brief--
total of all expenses
(-) expenses of personal nature (if identified)
divide the rest of amount by 1/10----- charge it to directors A/c
rest 9/10 to Profit and loss......
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