Journal Entry for Legal Expenses Paid

I think the above list helps to get an idea of the term “legal fees”. All these expenditures are of a revenue nature. They should therefore be recorded as expenditure for the same year, unless the expenditure has lasting benefits. This case, where the costs are ongoing in nature, is highly unusual. Here are the important points when transmitting the log entry. The debit side of the entry is always an expense account, in which the credit is made either in cash or as liabilities (if paid on credit). Debiting an expense account increases the amount of expenses in the financial statement. Legal fees are also expenses and fall under the nominal account. According to the golden rules of accounting, all expenses must be debited. The corresponding loan will therefore be a bank or liability based on full payment or deferral of payment. This accounting treatment is not new. Only that we need to understand the nature of the transaction and confirm whether we need to perform GL legal fees or not.

I hope this article gives a good understanding of the entry into the Legal Fees Journal. Let us know your thoughts or questions in the comments section. (Journal entry for Thakur & Co. legal services.) ABC Ltd has received legal advice from Thakur & Co. (law firm) and legal fees of Rs.100000/- will be paid to Thakur & Co. Please put the necessary journal entry back into the books of ABC Ltd. Therefore, an expense entry is of paramount importance, as it directly reduces the company`s revenue. In addition, an expense is also very important because it can be used to integrate the fraudulent transaction and make smoke and mirrors. Window dressing in accounting refers to management`s deliberate manipulation of financial statements in order to give users of financial statements a more favourable view of the company before they are made available to the public. Learn more about finances. Therefore, it must be carefully monitored and regularly checked to ensure its authenticity. An example of a journal entry would be the purchase of machines by the country, where the machine`s account would be debited and the cash account credited.

Learn more about spending. Note: In the example above, Thakur & Co. is a law firm and provides legal services, so RCM is applicable in such a case. The loss of the lawsuit could jeopardize the survival of ABC Company. ABC Company hired the best legal advisor. The expenses are enormous. Note: GST for legal service must be paid by the recipient of the reverse charge service @ 18%. Skip the journal entry for the following issues in XYZ Limited`s books for 2018: A lawsuit against the company is favorable and has resulted in high legal and legal costs. However, these expenditures result in benefits that do not relate to a single period. In addition, amounts can be so high that they can distort current year revenues when recognized as an expense.

This is the best example of accounting for expenses as other asset expenses. Note: Services provided by a single lawyer, including senior counsel or law firm, directly or indirectly through legal services, to an economic entity established in the taxable place. The GST is payable by that corporation, that is, the recipient. Note: RCM means: – In general, the supplier of goods or services pays tax on the supply. In the case of the reverse charge mechanism, the beneficiary is obliged to pay the tax, i.e. the tax burden is cancelled. At production SGST @9% A/c 9000 (reverse charge mechanism) Note: CGST and SGST Recoverable A/c on balance sheet under Current assets A/s. TDS payable A/c DR 10000 (TDS on legal fees u/s 194J) to cash / Bank A/c 10000 The long answer is that it depends.

If payments are instantaneous, then it would be a bank account. However, if a repayment period is allowed and the payment is deferred, the liability account comes into play. Commission received a journal entryTDS Entry journalSalary TDS journal entriesUnpaid expenses Recoverable SGST journal entry @9% A/c Dr 9000 payable to TDS 10000 (TDS on legal fees u/s 194J) to CGST output @9% A/c 9000 (reverse charge mechanism). (As a recoverable transfer from the GST RCM to the GST input, A/C on the last day of the month) Note: Legal services are subject to the GST reverse charge mechanism. For convenience, the designation of the GLG liability account can be done in accordance with its nature.