Purchases against debit note

Hi!

If a client asks to purchase items and than wants us to raise Debit notes for the same to the Client, how it will affect our accounts.

Will such purchases will be taken in our books of accounts and can we raise invoice to the client.

Thanks in advance

Replies (4)

Raising a debit note is same as raising a bill... it will not affect your books in any way

Account of the Party is Dr and Credit is given to sales (Other Income)

A debit note can be raised instead of an invoice when the item involved is not covered under any taxation law like a situtation when VAT, Excise , ST is not required to be collected, 

When tax is to be collected it has to be in the prescribed format of Tax Invoice.

Accounting Entry will be

1. Party A/c Dr

            To Sales

2. Cash A/c Dr

             To Party

Originally posted by : Roshan Thomas

Raising a debit note is same as raising a bill... it will not affect your books in any way

Account of the Party is Dr and Credit is given to sales (Other Income)

A debit note can be raised instead of an invoice when the item involved is not covered under any taxation law like a situtation when VAT, Excise , ST is not required to be collected, 

When tax is to be collected it has to be in the prescribed format of Tax Invoice.

Accounting Entry will be

1. Party A/c Dr

            To Sales

2. Cash A/c Dr

             To Party

Sorry Roshan, I didn't got your point.

If I purchase goods on behalf of my Client, means I will purchase the goods & pay the supplier and than I will be raising debit note (i.e; Cost of goods + taxes charged by the supplier).

How can I take this in my books of accounts under Sales.

Im sorry, i misunderstood your question

You wanted to know how to account for purchases on behalf of your client when you act has his agent correct ??

Then you can pass entry as below

1. Purchase from outside supplier on behalf of customer

Customer A/c Dr

    To Supplier A/c

2. Payment to supplier

Supplier A/c  Dr

     To Bank

3. Receipt from Customer

Bank A/c Dr

     To Customer A/c

     To Commission (assuming you receive commission)

Now if you want to have control over the movement of goods, instead of the first entry above you can pass this entry

1.1 Stock on agency A/c Dr

            To Supplier A/c

1.2 Customer A/c Dr

            To Stock on agency A/c

rest of the entry will be same.....

Got the entry OK. Now if I charge commission / profit from my, than I will have add service tax and in debit notes I cannot have taxes.

Correct me If wrong.

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