Question:
If I am a jeweller, I distribute gold worth Rs 5 lacs (market price) in a prize distribution, by selling ottery tickets. my cost of goods sold is Rs. 4,50,000. I also deduct TDS on Rs 5 lacs. Please let me know what would be the accounting entry for the same . what journal entry would i pass in my books and how would it affect my stock ?
Answer:
Dr. Purchase Rs.450000/-
Cr. Bank or Cash Rs.450000/-
(purchase of gold)
Dr. Prize distribution A/C Rs.500,000/-
Cr. Sales Account Rs.500,000/-
(Prize distributed worth)
DR. Bank Rs.150000/-
Cr. TDS from prize distribution Rs.150000/-
(@ 30% of Rs.5 lac collected from prize-winners)
Dr. TDS from prize distribution Rs.150000/-
Cr. Bank Rs.150000/-
(Amount remitted to Income tax office)
========
On close of financial year>>
Dr. Closingstock Nil
Cr. Profit Loss A/c Rs.500000/-
Dr. Purchase A/c Rs.450000/-
Cr. Profit Rs.50000/-
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