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Taxation and accounts query

Ks (Ac) (138 Points)

08 June 2022

ABC is gold and diamond trading firm and X is its neighbor .. in31/03/ 2019 ABC's electricity bill was of 2 lacs and in 01/01/2020 the firm get to know that its neighbor X is using ABC electricity so after giving legal notice to X . he settle this matter in 50 thousand and give 50000 to firm(ABC) so what is the journal entry for money received and does this settlement money is taxable

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4 Replies

sabyasachi mukherjee (27579 Points)
Replied 09 June 2022

1.why legal notice?
2. in the books of whom
3. settlement money transactions are generally not shown in books.
a seperate bill is booked and is squared off.
obtain a receipt from electricity dept.

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Atharv Sankliya (1354 Points)
Replied 09 June 2022

1 legal notice is for X is using abc electricity so abc give legal notice to X
2 In the book of ABC
3 how ?

Ks (Ac) (138 Points)
Replied 09 June 2022

in other words Mr.X is Thefting ABC's electricity after the firm get to know about it ABC file a suit against MR.X and MR.X have to compensate ABC by giving 50000 rs so what are the journal entry for it ???