Sir we are manusafucturer of Grinding machini & we are supply machine & now our customer send old machine due defect, same will replace now for without consideration.(transaction happens after warranty)
how to send new machine to our customer & what is GST complance
If it is warranty, that means you will replace old one with a new machine, and your company will recognise a provision based on past expectations for the number of units sold. Ex.
sold 1000 units
doubtful returns 10 units
create a provision for 10 @ 10₹
Warranty expense 100₹
To Provision liability 100₹
when one piece is returned, then replace it with a new machine and reduce provision liability like
Provision liability a/c 10₹
To Inventory (finished goods) a/c 10₹
gst is not involved as there is no cash transaction. If your reimbursing cash for the machine, then, you can reverse gst along with cash.
if you need more info borrow a CA - AS books as B.com books don’t cover the warranties treatments. All the best
CAclubindia
