Buyers Credit Accounting Entries

Posted on October 19, 2011 by Sanjay Mandavia

To Avail Buyers / Suppliers Credit: E: sanjaymandavia@gmail.com, : !"#"$%&&'(#$'
Buyers Credit Essential Accounting Entries, Classification and Disclosures in Books of
Accounts:
T)e *ollo+ing ,ournal Entries are to -e passed in t)e -oo.s o* /mporter:
1. When raw material is purchased on credit
0urc)ases A/c 1r 222222
To 0arty A/c Cr 222222
. When payment is made on our !ehalf to party
0arty A/c 1r 222222
To Ban. A/c Cr 222222
". When Buyers Credit is a#ailed against $C
3etter o* Credit 4name o* -an.5 A/c 1r 222222
To Buyers credit 4name o* -an.5 A/c Cr 222222
%. When Buyers Credit is a#ailed against Document at sight
0arty A/c 1r 222222
To Buyers credit 4name o* -an.5 A/c Cr 222222
&. When Buyers Credit rollo#er
Buyers credit 4name o* -an.5 A/c 1r 222222
To Buyers credit 4name o* -an.5 A/c Cr 222222
'. When Buyers Credit is paid !ack
Buyers credit 4name o* -an.5 A/c 1r 222222
Ban. /nterest A/c 1r 222222
To Ban. A/c Cr 222222
(. When Withholding )a* is deducted and paid + in cases where !uyers credit is a#ailed
from ,oreign Banks where W-) is applica!le.
Ban. /nterest A/c 1r 222222
To T1S 0aya-le A/c Cr 222222
4+)en +it))olding ta2 payment accrues5
T1S 0aya-le A/c 1r 222222
To Ban. A/c Cr 222222
4+)en +it))olding ta2 is paid to t)e department t)roug) T1S c)allan5
/. When due to ,oreign Currency ,luctuation income or loss is !ooked
+)en gain is -oo.ed
0arty A/c 1r 222222
To 6ain due to 7oreign Currency 7luctuation A/c Cr 222222
+)en loss is -oo.ed
3oss due to 7oreign Currency 7luctuation A/c 1r 222222
To 0arty A/c Cr 222222
0. When $C issuance charges taken !y !ank
3C issuance c)arges A/c 1r 222222
To Ban. account Cr 222222
11. When $o2 issuance charges taken !y !ank
3o8 issuance c)arges A/c 1r 222222
To Ban. account Cr 222222
11. When Buyers Credit Commission charges taken !y !ank
Ban. Commission A/c 1r 222222
To Ban. account Cr 222222
1. When )erm $oan 3nterest is paid to !ank
Ban. 4Term 3oan5 /nterest A/c 1r 222222
To Ban. Account Cr 222222
Disclosure in Balance 4heet as per 5re 6 re#ised 4chedule 73 +which is applica!le till "1st
8arch, 111.
Buyers Credit, Suppliers Credit and 8npaid 3C s)all -e classi*ied and disclosed under t)e su-9
)ead 9$oans and ad#ances from !anks: under t)e :ead o* 94ecured $oans: under 4ources of
,unds in t)e -alance s)eet o* t)e company as per t)e re;uirements o* Sc)edule </ to t)e
Companies Act, #"&'.
Disclosure in Balance 4heet as per ;e#ised 4chedule 73
Buyers Credit, Suppliers Credit and 8npaid 3C ta.en *or more t)an # year s)all -e
disclosed under t)e su-9)ead 93ong Term Borro+ings: under t)e :ead o* 9<on Current
$ia!ilities: under E=uity and $ia!ilities.
=)ereas Buyers Credit Suppliers Credit and 8npaid 3C ta.en *or less t)an # year s)all -e
disclosed under t)e su-9)ead 9S)ort Term Borro+ings: under t)e :ead o* 9Current
$ia!ilities: under E=uity and $ia!ilities.
Disclosure in 5rofit and $oss 4tatement
3C issuance c)arges, 3o8 issuance c)arges, Ban. Commission are considered as e2penses as
Ban. C)arges and Ban. /nterest is disclosed under t)e )ead o* ,inance Cost.
6ain due to Currency 7luctuation is considered as income as E2c)ange 6ain and disclosed under
t)e )ead o* >ther 3ncome.