sanil (Accountant) (149 Points)
19 January 2010We are real estate company hired a lift maintenance co(XYZ Co) for maintenance of lifts. AMC amount is 10,000/- payable in 4 equal installment in advance
AMC period-01/01/2009 to 31/12/2009
here we paid 5000(1st & 2nd instal.) on 5th may 2009. instead of 1st jan and 1sr April respectively.the 3rd &4th installment is duly paid on time.
please suggest journal entry for the above transactions.
PANKAJ SHARMA
(ACCOUNTS MANAGER)
(79 Points)
Replied 20 January 2010
AMC amount is 10,000/- payable in 4 equal installment in advance
AMC period-01/01/2009 to 31/12/2009
BY Prior Period Expense Dr. 2500
By Reparis & Maintenence Expenses Dr. 7500
To XYZ Party A/c Cr. 10,000
Pradip
(Accountant/Management)
(106 Points)
Replied 20 January 2010
I think on 31-03-09 a due entry should to pass as below.
Annual Maintenance Contract (Exp.) A/c. Dr. Rs. 2500.00
To Annual Maintenance Contract Payable A/c. Rs. 2500.00
and on 05-05-09 when two installment have been paid the journal entry should be
Annual Maintenance Contract (Exp.) A/c. Dr. Rs. 2500.00
Annual Maintenance Contract Payable A/c.Dr. Rs. 2500.00
To Cash/Bank A/c. Rs. 5000.00
After that when 3rd & 4th installment paid on date the entry should to be
Annual Maintenance Contract (Exp.) A/c. Dr. Rs. 2500.00
To Cash/Bank A/c. Rs. 2500.00
Regards.
Pradip Pandey
Pradip
(Accountant/Management)
(106 Points)
Replied 20 January 2010
But if the provision was not made on 31-03-09 the I think the entry should be on payment date i.e. 05-05-09.
Prior Period Exp. A/c. Dr. 2500.00
AMC (Exp.) A/c. Dr. 2500.00
To Cash/Bank A/c. 5000.00
Term of the contract.
1. Contract is for one year.
2. Amount is payable in 4 equal instalment in advance.
So the Due dates are
01.01.09 - 2500
01.04.09 - 2500
01.07.09 - 2500 &
01.10.09 - 2500
On the above date following entries need to be passed.
Maintenance Charges Dr 2500
To XYZ Ltd 2500.
While making payment pass the following entry
XYZ Ltd A/c Dr xxx(What ever amount you pay)
To Bank xxxx
seema
(Accounts Executive)
(33 Points)
Replied 20 January 2010
I think on 31-03-09 a due entry should to pass as below.
Annual Maintenance Contract (Exp.) A/c. Dr. Rs. 2500.00
To Annual Maintenance Contract Payable A/c. Rs. 2500.00
and on 05-05-09 when two installment have been paid the journal entry should be
Annual Maintenance Contract (Exp.) A/c. Dr. Rs. 2500.00
Annual Maintenance Contract Payable A/c.Dr. Rs. 2500.00
To Cash/Bank A/c. Rs. 5000.00
After that when 3rd & 4th installment paid on date the entry should to be
Annual Maintenance Contract (Exp.) A/c. Dr. Rs. 2500.00
To Cash/Bank A/c. Rs. 2500.00
Regards.
Pradip Pandey
I think he is right
seema
(Accounts Executive)
(33 Points)
Replied 20 January 2010
I think on 31-03-09 a due entry should to pass as below.
Annual Maintenance Contract (Exp.) A/c. Dr. Rs. 2500.00
To Annual Maintenance Contract Payable A/c. Rs. 2500.00
and on 05-05-09 when two installment have been paid the journal entry should be
Annual Maintenance Contract (Exp.) A/c. Dr. Rs. 2500.00
Annual Maintenance Contract Payable A/c.Dr. Rs. 2500.00
To Cash/Bank A/c. Rs. 5000.00
After that when 3rd & 4th installment paid on date the entry should to be
Annual Maintenance Contract (Exp.) A/c. Dr. Rs. 2500.00
To Cash/Bank A/c. Rs. 2500.00
Regards.
Pradip Pandey
I think he is right
Desperado
(Cost And Management Accountant)
(129 Points)
Replied 20 January 2010
Dear Sanil
Expense will be debited at the outset of the event by full amount and liablity will be credited by the same.When the proportion of the liablity is paid, then liablity should be offset against cash/bank by the amount being paid to extinguish the liablity.
However, it also depends on whether accural basis of Accountancy is being used or cash basis.
Regards,
Desperado
(Cost And Management Accountant)
(129 Points)
Replied 20 January 2010
Dear Sanil
Expense will be debited at the outset of the event by full amount and liablity will be credited by the same.When the proportion of the liablity is paid, then liablity should be offset against cash/bank by the amount being paid to extinguish the liablity.
However, it also depends on whether accural basis of Accountancy is being used or cash basis.
Regards,
samip karpe
(accounts assistance)
(152 Points)
Replied 27 January 2010
i think Pradip suggest correct entry
chirag
(accountant)
(21 Points)
Replied 15 September 2011
Sir,
please guide me what entry shall be passed for Annual Maintenance Contract for Xerox Machine and the bill amount is less than 30000/-. the bill shall be issued by the contractor at the end of every month and during the whole year the gross bill amount may not exceed to Rs. 75000/- in a particular financial year.
Hence please guide me what Journal Entries shall be passed if...
1) TDS is not Applicable or
2) TDS is applicable
CAclubindia
