I have booked expenses and pass the following entry -
Expenses A/c Dr. 1000.00
Service Tax Dr 103.00
To Creditors A/c 1080.94
To TDS 22.06
Now at the time of Finalization of Books for FY 11-12, it came to know that This creditors is no longer payable & hence require to w/off. Hence pls suggest which entry should be passed out of below two -
Here I assume that full service tax has to be reversed.
1) Creditors A/c Dr. 1080.94
To Service Tax 103.00
To Expenses 977.94
OR
Here I am assuming that service tax should be reversed with 10.30 % of total expenses
2) Creditors A/c Dr. 1080.94
To Service Tax (1080.94/110.30*10.30) 100.94
To Expenses (1080.94/110.30*100.00) 980
Please confirm & also share the reason.