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Journal entry

RAJ KUMAR (FINANCE MANAGER) (1393 Points)

07 December 2012

HELLO FRIENDS, PLS. TELL ME JOURNAL ENTRY OF THIS:

IN A PURCHASE BILL IT IS SHOWN

AMOUNT - SAY RS. 5000

- CASH DISCOUNT- 500

TAXABLE AMOUNT - 4500

VAT 4500 @ 10% - 450

SURCHARGE - 45

TOTAL 4995

PLS. HELP ME.

THANKS.

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17 Replies

Bhushan Jaju (Student) (970 Points)
Replied 07 December 2012

Purchases A/c Dr. 5000

Vat A/c Dr.450

Surcharge Dr.45

To Cash Discount A/c 500

To Party/Cash/Bank A/c 4995

1 Like

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DEEPAK ROHERA (Senior Accountant) (285 Points)
Replied 07 December 2012

Puchase A/c Dr. 5000/-

Vat A/c Dr. 450/-

Surcharge Dr; 45/-

To Dicount Cr.500/-

To Party Cr.4995/-

Nithin Chettoor (Assistant Manager) (388 Points)
Replied 07 December 2012

Agreed to the above!!!

CA CS Chirag (Practicing CA) (834 Points)
Replied 07 December 2012

agree with Bhusan

Bhushan Jaju (Student) (970 Points)
Replied 07 December 2012

thanks chirag..

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Kalpesh Chauhan, (Tax Assistant (Accounting Technician CA FINAL CS PROF. PROG. B.Com)) (8311 Points)
Replied 07 December 2012

Originally posted by : Bhushan Jaju
	Purchases A/c Dr. 5000 Vat A/c Dr.450 Surcharge Dr.45 To Cash Discount A/c 500 To Party/Cash/Bank A/c 4995

CA rahul (BCOM(H) ACA) (725 Points)
Replied 07 December 2012

agreed with all

CA Sanjay Bag (CHARTERED ACCOUNTANT) (3340 Points)
Replied 08 December 2012

The above is correct.

M K U VARMA (PROPRIETOR & CEO) (38 Points)
Replied 09 December 2012

I feel CASH DISCOUNT need not be brought into book as per basic accounting concepts. Secondly it will pose a problem under VAT since purchase value is NOT PROPORTIONATE to the amount of input claimed

CA Sourabh Goenka (Chartered Accountant) (249 Points)
Replied 10 December 2012

First u should right your vat amount.

vat should be charged on 5000 not on 4500. then the cash discount is given.. If you will provide vat on 4500, it means government lose vat on amount of 500, which is not admissible..

Then entry will be:

Purchase a/c Dr.

Vat a/c Dr.

To Cash

To Cash Discount

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M K U VARMA (PROPRIETOR & CEO) (38 Points)
Replied 10 December 2012

I disagree with Mr.Sourabh. DISCOUNT isa valid deduction under various VAT acts including CST. As such there is no problem with discount here.

CA Sourabh Goenka (Chartered Accountant) (249 Points)
Replied 10 December 2012

give me a link of relevant page where cash discount is a valid ground for deduction..

Sir, there is a difference between trade discount and cash discount... and your provision will applicable on trade disoc*nt.. not on cash discount..

otherwise see me relevant page of this provision.. Just tell me section of relevant act.. i will see it..

don't take otherwise.. every person has its own view..

manoj upadhyay (accountant) (21 Points)
Replied 10 December 2012

I agree with this entry

Manoj kumar upadhyay

sudhir munjal (Student) (53 Points)
Replied 11 December 2012

purchase a/c (dr.)-4500, Vat(dr.)-450, Surcharge(dr.)-45, To cash-4995. . . Purchase shown net of discount.. By doing ths u wil nt be getng problem at ur sales tax asesment..