Finance Business Blueprint Document

02. Expense Provisioning during month/year closure

Purpose

This is a very common Scenario available in Industry where service delivered by vendor in a month and submitted Invoice in subsequent month or next year. Example of such type of Provisioning are:-

Auditors Remuneration
Electricity Expenses
Interest payable against unsecured loan to NBFC
Any other

Steps to be followed for Provisioning

Step 1: Estimated amount provisioning through Non Store Purchase Bill without receiving actual bill from vendor,

against basic value only without inclusion of GST.

Step 2: Actual Invoice received and booked after receiving from vendor through Non Store Purchase Bill

Step 3: Passing some adjustment entries for adjusting and setting off ledgers through Journal Voucher.

We are now illustrating all three Steps against possible scenarios as below :

Case A1 – Provision made for Rs 1 Lac ( Basic amount ) and Bill Received for Rs. 1 lac + GST (GST Input Credit applicable)

Step 1: Vendor Name -Media House (1^st month Non Store Purchase Provisioning Bill Booking)

Account Head	Parent Account Head	Debit	Credit	Ledger Group	Remarks
Advertisement & Publicity		100000		Expenses> Indirect Expenses	This is GL to be opened by user during Chart of Accounts creation
Media House	Payable Provision for Expenses		99000	Liabilities> Current Liabilities> Other Current Liabilities	Need to create separate Control Account with classification > Same As Supplier. Media House is a sub ledger opened during Chart of Accounts creation will be automatically available under Payable Provision for Expenses. Put provisional Invoice No as “Med/Prov/09/22” in NSP Bill
TDS ON CONTRACTORS	Tax Deducted at source		1000	Liabilities> Current Liabilities> Duties & Taxes	This is a System generated Ledger. TDS will be deducted depending on the configuration of Vendor [ Company / Other than Company ]

Step 2: Vendor Name -Media House (2^nd month Non Store Purchase Actual Invoice Booking)

Account Head	Parent Account Head	Debit	Credit	Ledger Group	Remarks
Advertisement & Publicity		100000		Expenses> Indirect Expenses
Media House	Sundry Creditor for Expenses		118000	Liabilities> Current Liabilities> Trade Payable	This time do not change Parent Account during NSP Booking. This sub ledger is created during Chart of Accounts creation Put actual invoice no available in physical bill submitted by vendor. Invoice No – “Med/10/22”
CGST Credit Available		9000		Liabilities > Current Liabilities > Duties & Taxes	System Generated Ledger ( GL )
SGST Credit Available		9000		Liabilities> Current Liabilities> Duties & Taxes	System Generated Ledger ( GL )

Step 3: JV to be passed for Set Off Entries

Account Head	Parent Account Head	Debit	Credit	Ledger Group	Remarks
Advertisement & Publicity			100000	Expenses > Indirect Expenses
Media House	Payable Provision for Expenses	99000		Liabilities > Current Liabilities > Other Current Liabilities	Adjust against Bill No – “Med/Prov/09/22””
Media House	Sundry Creditor for Expenses	1000		Liabilities > Current Liabilities > Trade Payable	Adjust Bill No- “Med/10/22”

Case A2 – Provision Made for Rs 1 Lac ( Basic amount ) and Bill Received for Rs. 1 lac + GST (GST Input Credit not applicable)

Step 1: Vendor Name -Media House (1^st month Non Store Purchase Provisional Bill Booking)

Please refer Case A1> Step 1

Step 2: Vendor Name -Media House (2^nd month Non Store Purchase Actual Invoice Booking)

Account Head	Parent Account Head	Debit	Credit	Ledger Group	Remarks
Advertisement & Publicity		118000		Expenses > Indirect Expenses
Media House	Sundry Creditor for Expenses		118000	Liabilities > Current Liabilities >Trade Payable	Invoice No – “Med/10/22”

Step 3: JV to be passed for Set Off Entries

Please refer Case A1 > Step 3

Case B1 – Provision Made for Rs 1 Lac ( Basic amount ) and Bill Received for Rs. 1.5 lac + GST (GST Input Credit applicable)

Step 1: Vendor Name -Media House (1^st month Non Store Purchase Provisional Bill Booking)

Please refer Case A1 > Step 1

Step 2: Vendor Name -Media House (2^nd month Non Store Purchase Actual Invoice Booking)

Account Head	Parent Account Head	Debit	Credit	Ledger Group	Remarks
Advertisement & Publicity		150,000		Expenses > Indirect Expenses
Media House	Sundry Creditor for Expenses		176500	Liabilities > Current Liabilities > Trade Payable
CGST Credit Available		13500		Liabilities > Current Liabilities > Duties & Taxes
SGST Credit Available		13500		Liabilities > Current Liabilities > Duties & Taxes
TDS ON CONTRACTORS	Tax Deducted at source		500	Liabilities > Current Liabilities > Duties & Taxes	TDS will be deducted against additional Rs. 50,000/- expenses incurred.

Step 3: JV to be passed for Set Off Entries

Please refer Case A1 > Step 3

Case B2 – Provision Made for Rs 1 Lac ( Basic amount ) and Bill Received for Rs. 1.5 lac + GST (GST Input Credit not applicable)

Step 1: Vendor Name -Media House (1^st month Non Store Purchase Provisional Bill Booking)

Please refer Case A1 > Step 1

Step 2: Vendor Name -Media House (2^nd month Non Store Purchase Actual Invoice Booking)

Account Head	Parent Account Head	Debit	Credit	Ledger Group	Remarks
Advertisement & Publicity		177,000		Expenses > Indirect Expenses
Media House	Sundry Creditor for Expenses		176500	Liabilities > Current Liabilities > Trade Payable
TDS ON CONTRACTORS	Tax Deducted at source		500	Liabilities > Current Liabilities > Duties & Taxes

Step 3: JV to be passed for Set Off Entries

Please refer Case A1 > Step 3

Case C1 –Provision made for Rs. 1,00,000/- and Actual Invoice received for Rs. 80,000/-+GST (GST Input Credit applicable)

Step 1: Vendor Name -Media House (1^st month Non Store Purchase Provisional Bill Booking)

Please refer Case A1 > Step 1

Step 2: Vendor Name -Media House (2^nd month Non Store Purchase Actual Invoice Booking)

Account Head	Parent Account Head	Debit	Credit	Ledger Group	Remarks
Advertisement & Publicity		80000		Expenses > Indirect Expenses
Media House	Sundry Creditor for Expenses		94400	Liabilities > Current Liabilities > Trade Payable
CGST Credit Available		7200		Liabilities > Current Liabilities > Duties & Taxes
SGST Credit Available		7200		Liabilities > Current Liabilities > Duties & Taxes

Step 3: JV to be passed for Set Off Entries

Account Head	Parent Account Head	Debit	Credit	Ledger Group	Remarks
Advertisement & Publicity			99000	Expenses > Indirect Expenses
Media House	Payable Provision for Expenses	99000		Liabilities > Current Liabilities > Other Current Liabilities	Adjust against Bill No – “Med/Prov/09/22””

Note :- Excess TDS of Rs. 200/- deducted and deposited against provisioning to be adjusted against next or subsequent month TDS Deposit [ During provisioning, TDS deducted Rs. 1000/- but as per Bill value TDS will be Rs. 800/-]

Case C2 –Provision made for Rs. 1,00,000/- and Actual Invoice received for Rs. 80,000/-+GST (GST Input Credit not applicable)

Step 1: Vendor Name -Media House (1^st month Non Store Purchase Provisional Bill Booking)

Please refer Case A1 > Step 1

Step 2: Vendor Name -Media House (2^nd month Non Store Purchase Actual Invoice Booking)

Account Head	Parent Account Head	Debit	Credit	Ledger Group	Remarks
Advertisement & Publicity		94400		Expenses > Indirect Expenses
Media House	Sundry Creditor for Expenses		94400	Liabilities > Current Liabilities > Trade Payable

Step 3: JV to be passed for Set Off Entries

Please refer Case C1 > Step 3

Note :- Excess TDS of Rs. 200/- deducted and deposited against provisioning to be adjusted against next or subsequent month TDS Deposit [ During provisioning TDS deducted Rs. 1000/- but as per Bill value TDS will be Rs. 800/-]