Rajesh Raman ( ) (292 Points)
12 March 2016One of my client P.B pvt ltd is the Distributor/Dealer of Videocon d2h. P.B pvt Ltd is recharge from Videocon (Like mobile E recharge) and the payment made by PB pvt ltd to Videocon including service tax, and PB pvt ltd recharge to customers and collecting income from customers. what is the journal entry for the follwing cases
1.Recharge from D2H (incl ST) and Payment
2.Recharge to customers and collection
CA Raj Doshi
(Practising CA)
(8924 Points)
Replied 13 March 2016
CA Prateek Garg
(CA in Practice)
(1447 Points)
Replied 13 March 2016
AT THE TIME OF PAYMENT TO VIDEOCON
This transaction results in creation of recharging rights (asset) for the company and outflow of cash. Any difference in cash outflow and recharge rights created is the income of the company.
Recharging Rights (Asset) ...............................Dr.
Service Tax (Exp.) / Input ST (Asset)...............Dr.
To Cash/Bank
To Profit & Loss A/c
RECHARGING OF CUSTOMERS ACCOUNT
While recharging the customer’s account, company is only utilising its recharging rights purchased earlier.
Cash / Bank.........................................................Dr.
To Recharging Rights (assets)
CA Raj Doshi
(Practising CA)
(8924 Points)
Replied 14 March 2016
CA Raj Doshi
(Practising CA)
(8924 Points)
Replied 14 March 2016
CA Prateek Garg
(CA in Practice)
(1447 Points)
Replied 14 March 2016
"There is no future economic benefits flowing to the enterprise from recharging rights. Further it is not a right.".........hmmm
CA Raj Doshi
(Practising CA)
(8924 Points)
Replied 15 March 2016
CAclubindia
