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Journal Entry

22 June 2010

If any one can give me their advice for my below mentioned querry than pls do the need ful.....

Suppose we have incurred expenses which is related to march month and our creditor gives the bill for the same expense in the month of April dated ,say 5th april 2010. Than can we book the actual bill on 31st march 2010 or we should pass provision entry for the expense on 31st March 2010 and book the actual bill only on 5th April 2010.

If their is any other treatment please advice.

Regards,

Sachin Gupta

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22 Replies

Abhilesh (CA FINAL) (112 Points)
Replied 22 June 2010

3 things can be done:

1) If possible get a bill in the month of march only...or

2) U can create a provision entry for the amount in march...Deduct tds if applicable or,

3) Book the bill April and classify the same as a PPA..

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SALIL (PRACTICE) (63 Points)
Replied 22 June 2010

pass the entry in April.Dont do anything else.

Akhil Gupta (Manager F&A) (856 Points)
Replied 22 June 2010

Agreed with Abhilesh

Rajat Garg (Article) (47 Points)
Replied 22 June 2010

you have to pass a provision entry in march first and then in april you can adjust it with provision made.

MARCH

1. By Expense a/c...Dr.

By TDS Payable a/c(if any)

To Provision for Expense A/c Cr.

(Being Provision Created)

Expense will be transfered to P/L a/c and provision will be shown in Balance Sheet under Current

Liabilities

APRIL

By Provision For expense a/c Dr.

To Creditor/Bank a/c Cr.

1 Like

komal jain (student) (36 Points)
Replied 22 June 2010

agree with Rajat

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vishambhar sharma (article) (22 Points)
Replied 22 June 2010

in march exp. A/c Dr ...........

To Provision for Exp. ..............

next year reverse of above entry will be passed and next entry will be as below:

In april exp a/c Dr

to Bank a/c

It doesnt matters whether bill is raised afterwards in april as per accrual concept work is related to march hence liablity is accrued in march. and also when bill is raised by the party it is quoted upon the bill that work done for the month of march while the bill is dated 5 april.

we have to create a provision of the actual amount if known and then payment will be in next year

(Guest)

agreed with salil as it is not possible to catch whether the expense is related to march so you have to pass entry in april only & nothingelse.........

as per bill you are donig expense in april how can we pass entry in march.

deo prakash srivastava (auditor) (63 Points)
Replied 22 June 2010

u should pass provisional entry on 31st march otherwise it wil hav to transfer in prior period exps. a/c if books r maintained on mercantile basis.but if books hav been maintained on cash basis then u can incorporate on 5th april.

JITENDRA KUMAR GARG (ARTICLE ASSESSTANT) (46 Points)
Replied 22 June 2010

i agree with rajat garg

jitendra kumar garg

Ashish Ostwal (Practice) (30 Points)
Replied 22 June 2010

Because the expense was incurred in March, you have to book it in the same month; as per accrual concept. You have to make the provision entry of adhoc amount based on estimation (if the exact amount is not known) in March and later at the time of receipt of bill you can reverse the provision made.

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Dheeraj (Learner) (1100 Points)
Replied 22 June 2010

i agreed with rajat, vishambhar

(Guest)

Originally posted by : Rajat Garg
	you have to pass a provision entry in march first and then in april you can adjust it with provision made. MARCH 1. By Expense a/c...Dr. By TDS Payable a/c(if any) To Provision for Expense A/c Cr. (Being Provision Created) Expense will be transfered to P/L a/c and provision will be shown in Balance Sheet under Current Liabilities APRIL By Provision For expense a/c Dr. To Creditor/Bank a/c Cr.

totally agree with rajat

sunil (ca) (21 Points)
Replied 22 June 2010

sunil paid rent 5000

how to pass an journal entry

CA Suri Kota (Assistant Manager @ EY) (955 Points)
Replied 22 June 2010

I think as the expense are paid in advance simply we can treat as Advance for goods . It is a simple treatement rather than going for complex ones. As u received the bill only after the closure of books, its better to book in the form of advance as it is certainly in the form of advance coz the concerned billing is not been done......