Did you ever got confused about how to pass stock market entries in Tally as trading?
If your answer is YES, then this video is surely for you.
In this video, I have tried to clear all your doubts for creating stock market entries in Tally as a trader.
Still, if you have any doubts, just comment below and I’ll solve your doubt. 🙂
Share the video if you like it or find it useful.
If you are an investor and NOT a trader in Stock Market, then look at this post in which I have explained Stock market Entries in Tally as an investment.
Stock Market Entries in Tally
Read this for more clarity…
In this video I have explained entries for stock market as trading. What it means?
Well, it means that you are trading in stock markets and NOT investing.
In simple words, your main business is stock trading like any other business and you earn your major part of income from stock trading.
You do NOT just invest your money in stocks and sit for long time. That is called investment.
Instead you trade in stocks on regular basis and earn (or loose money 🙁 ) from trading.
Entire video is based on Stock Trading and NOT investing.
When you create an entry for trading in stock market, entry will be reflected in:
- Balance Sheet
- Profit and Loss account and
- Stock Summary
If it is an investment in stocks, the effect will NOT be reflected in Profit and Loss account. Rather it will be reflected in just the Balance Sheet and Stock Summary.
I will create 6 Ledgers and a Stock Item in this video. I’ve listed and explained everything in the post below.
You can create ledger by following these steps:
- From Gateway of Tally, select Accounts Info.
- Then select Ledgers
- Under Single Ledger, select Create
- Create ledger as I have explained below in each ledger.
Stock Broker under Sundry Creditors (You can also create it under Sundry Debtors).
Create Stock Broker Ledger with the below configurations as shown in the picture.
Reason why we can create Stock Broker Ledger under Sundry Creditors or Sundry Debtors:
Let’s say, you have purchased Reliance shares and your total bill including brokerage and other expenses is of ₹10,000. It means you have to pay your broker ₹10,000.
That means for YOU, Stock Broker is currently your Creditor because you have to pay him for the shares that it has purchased on behalf of you.
Now, let’s say, you sold Reliance shares for ₹15,000 which you have bought in the above transaction.
That means for you, the same Stock Broker is now your Debtor for ₹5,000 (₹15,000-₹10,000) because Stock Broker has to pay money to you for selling the Reliance Shares for ₹15,000.
As there are hundreds of transactions through out the year, the situation of your Stock Broker as a Creditor and a Debtor constantly changes in your accounts.
Therefore, at the time of creating Stock Broker ledger, it does not matter whether you create it under Sundry Creditor or Sundry Debtor.
At the end of the year, when you are closing your books, you can check out your Balance Sheet and see what is the position of your Stock Broker.
Whether you have to pay money to your Stock Broker and vice versa and alter the ledger to Sundry Creditor or Sundry Debtor.
Don’t worry, I have even explained this in the video. 🙂
Share Purchases under Purchase Accounts
Create Share Purchases ledger with below configurations as shown in the picture.
Make sure you have set Inventory Values are affected to YES because we will be entering Stock Items while creating journal entry for purchasing shares.
Share Sales under the Sales Accounts
Create Share Sales Ledger with below configurations as shown in the picture.
Again, make sure you have set Inventory Values are affected to YES because we will be entering Stock Items while creating journal entry for selling shares.
Share Brokerage under Direct Expenses
Create Share Brokerage Ledger with below configurations as shown in the picture.
Share Brokerage Ledger will be used for recording share brokerage which you have to pay to your Stock Broker.
We have created a different ledger because we can record brokerage expenses separately.
On the other hand, you can also record share brokerage in the Stock Broker ledger.
STT, Service Tax & Other Charges under Direct Expenses
Create STT, Service Tax & Other Charges Ledger with below configurations as shown in the picture.
If you are a Service Provider
If you are NOT a Service Provider, skip this section and move ahead directly to “Stock Item in Tally”.
If you are a Service Provider, you can take credit of service tax paid on stock market transactions.
For that you have to record service tax separately in a new ledger named Service Tax because you are paying service tax.
With the help of a separate ledger for service tax, you do not have to count the entire service tax credit because it will automatically be calculated by Tally at the end of the year.
Whenever you create an entry you will enter service tax amount in different ledger called Service Tax so at the end of the year, the amount is already calculated.
But, first you have to Enable Service Tax feature in Tally to use it.
- Features from Gateway of Tally by pressing F11
- Select Statutory & Taxation from the Company Features Menu
- Then, go to Enable Service Tax and set it to YES
- Then, press Enter and set NO for Set/Alter Service Tax Details
- Now, press CRTL+A to save everything.
Now come back to the Ledger Creation Menu once again for creating Service Tax Ledger.
Service Tax under Duties & Taxes
Create Service Tax Ledger with below configurations as shown in the picture.
Now that you have created Service Tax ledger as you are a Service Provider, one more thing is remaining before we can create stock market entry in Tally is the Stock Item.
Stock Item in Tally
You have to create a Stock Item in Inventory Info. for every unique scrip or stock you want to enter.
For example, in this video, I have bought shares of Reliance therefore I will create Stock Item named Reliance.
To create a stock item in Tally you will need to follow this simple process.
- Inventory Info. from Gateway of Tally
- Select Stock Items from the Menu
- Then, select Create under Single Stock Item
- Now you are in the Stock Item Creation Menu
- Enter the name of the stock which in our case here is Reliance
- When you come to Units, press ALT+C to create unit.
- Units for Stocks are numbers so we will create no. for short.
- In Symbol, type no.
- Now, press CTRL+A to save the unit.
- Now again press CTRL+A to save the Stock Item for Reliance.
You have successfully created a stock item. Cheers 🙂
Now if you watch the video you will fully understand the process with much more clarity and ease of concepts.
I have created the entry in the video so go ahead and watch the video to see the Final Entry.
But still if you have any questions or doubts, feel free to comment below and I will answer each and every doubt you have.