Correct Journal Entry

This query is : Resolved

Devendra (Querist)
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04 October 2010 Mr. X want to pay Rs. 20000 on behalf of Mr. A to Mr. C.
Mr. X passed the following entry in his books of Accounts:-

Mr. A 200000
(grouped under s. debtors)
To Mr. C 20000
(grouped under s.creditors)
(payment to be made to Mr. C on behalf of Mr. A)

Whether the above JV is correct?

SAMEER

SAMEER (Expert)
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04 October 2010 1.Wrong entry
2. Bank not affected
3. also there may be violation of section 269SS
4. Mr C account should not be created
5. Why you are classifying it under S/debtor or S/creditor instead of Loan n advances? is there any sale or service transaction involved?