we are a trading company providing devices and some times
after sales service. when any defect came we just replace
the hardware from another defective device and getting the
payment from the customer. how can we account that? is
there any tax implications for this?
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Answer / syedghouse
At the time of sale
cash sales. Cash A/c-------Dr
to sales A/c
2. Credit sales
Customer Name A/c ----Dr
to sales A/c.
3. Sales retuns.
Sales return A/c----- Dr
to Customer A/c
4. resupply of goods
Samme Entry.
%. Sellenr return goods to its vendor.
Vendor name a/c ----- Dr
Purchase retuern A/c
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Answer / Shilpi Goswami
To account for this, you may consider using an asset or inventory account for the devices under your control. When a device is sold, debit the revenue account (e.g., sales) and credit the asset account (inventory). When a defective device is received from the customer, debit the liability account (accounts receivable) and credit the asset account (inventory). Upon replacing the hardware from another defective device, debit the expense account (repair or maintenance) and credit the asset account (inventory). For tax implications, it's recommended to consult a tax professional as tax laws can vary depending on jurisdiction.
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