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Cheque received

Shivani (Learner) (1881 Points)

06 July 2015

Dear Friends

what entry do we pass when we receive a cheque say cheque Rs. 1000 received from X on 01-Apr-2015 but we deposited it in bank only on 7-Apr-15.

Will we pass entry on 01-Apr-15 when we receive the cheque?

Also if we issue a cheque when do we pass its entry? When we issue it or when we hand it over to the party?

I need to know the entry in both cases.

Shivani

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17 Replies

Kumar Gaurav (Going...to be C.A soon...) (1624 Points)
Replied 06 July 2015

Yes, there is a general practice to pass following entries-

on 01-04-2015 (Cheque in Hand) Dr 1000

To Mr. X 1000

and on 7-04-2015 (Bank A/c) Dr 1000

To Cheues in hand 1000

By passing above entry on 01-04-2015 we'ill be able to trace/track our cheques as well.

Generally, we pass the entry as and when it is issued because there transactional effect will be reflected in BRS only.

Rajesh Kumar Gupta (Senior Divisional Manager) (714 Points)
Replied 06 July 2015

If cheque is dated 07th April, keep cheque physically under safe custody and account for on 7th.

CA Bhargav Nathwani (CA in Practice) (8307 Points)
Replied 06 July 2015

hi..

I disagree with Rajeshji...no doubt answer was given from practical angle and it might be done but it's not possible when such issues are faced in Examination.

As per the basic rules of Account, when cheque received by us but not deposited into the bank account as on that date following Journal Entry should be passed :

Cash Account Dr 10,000

To Mr X Account 10,000

When cheque is deposited in the bank account as that date:

Bank Account Dr 10,000

To cash 10,000

Reason:

01. Debtor should be credited as on the date when he/she issued the cheque.

02. Bank Account can't Dr if cheque is not deposited, therefore we open cash account for adjustment of this transaction.

You can find this transaction in the books of standard 11 for your reference.

Kumar Gaurav (Going...to be C.A soon...) (1624 Points)
Replied 06 July 2015

I disagree with mr. Bhargav because practically if we debit cash account on receipt of cheque then our cash ledger ill show wrong balance ie' inflated balance till deposition of same cash into bank.

Harinadh (EMPLOYEE) (46 Points)
Replied 07 July 2015

Upon deposit of cheque the following entry to be made Bank a/c Dr X a/c When the payment is made the entry to be passed is X a/c dr To Bank. Until the cheque is realised the transaction should be reflected in BRS.

sudhir sen (Proprieter) (21 Points)
Replied 07 July 2015

See the accounting principle and also follow the accounting systems. Pass journal entry at the time of receipts of cheque and then at the time of deposit the cheque. As and when cheque issue pass a entry. Open cheque in hand account.

Deepak Bhagtani (Learner) (462 Points)
Replied 07 July 2015

You Should Pass an Entry when it is reflected in your Bank Statement i.e on 7th April. (As Cheque received and cheque payment entries are done on the basis of bank statement) no need to complicate and pass two entries.

chandra (student) (528 Points)
Replied 07 July 2015

Receipt of cheque is not a transaction. Receipt voucher should be prepared and dated on the cheque is deposited in the Bank account. Payment voucher date should be the date of cheque.

CA Bhargav Nathwani (CA in Practice) (8307 Points)
Replied 07 July 2015

Originally posted by : Kumar Gaurav
	I disagree with mr. Bhargav because practically if we debit cash account on receipt of cheque then our cash ledger ill show wrong balance ie' inflated balance till deposition of same cash into bank.

Agree sir. But it's given in the syllabus text book. Even if you think practically then..CASH is very flexsible to use...no body is 100% maintaining it as uselful it is...."Cheque on hand" Account should be opened. It's genunine solution..

thanx for correct me..

Shivani (Learner) (1881 Points)
Replied 28 July 2015

Dear Gaurav

Will Cheque in Hand account will be opened under Current Assets in Tally?

Gaurav, when we issue cheque but have not given it to the party in whose favour we issued it, then can be pass the following entry

Party

to cheque in hand

and when we give the cheque to the party

cheque in hand

To Bank

Please advise

Regards

Ravi Bhojwani (Proprietor) (40 Points)
Replied 29 July 2015

the entries are to be made in the books of account as and when the cheque is received or cheque is handed over to the party.

for differences between the cheque received date & Cheque clearance in bank, you to maintain bank reconciliation book.

Kumar Gaurav (Going...to be C.A soon...) (1624 Points)
Replied 30 July 2015

@ Ms. Shivani-

Yes, it can be opened under Current assets in tally

Whenever, you received PDC cheque.

Dr. Cheque in Hand

Cr. Party name

& On deposition

Dr. Bank

Cr. Cheque in hand

Rest, bank reco. will take the affect of pending entries accordingly.

arun (Account Manager) (24 Points)
Replied 30 July 2015

Dear Shivani, You can pass only one enty in the book of Account as given below. Bank A/c Dr. 1000 To Mr X A/c. 1000 This entry pass on cheque received date.