Bank reco.

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 June 2014 Dear Sir,

During preparation of bank reco. what should consider & what is stale cheque & it's use in reco.

thanks

Sandeep Dharar

Sandeep Dharar (Expert)
Follow

10 June 2014 Check presented at the paying bank after a certain period (typically six months) of its payment date. A stale check is not an invalid check, but it may be deemed an 'irregular' bill of exchange. A bank may refuse to honor it unless its drawer reconfirms it payment either by inserting a new payment date or by issuing a new check. Also called stale dated check.

The date of clearance of the cheque in the bank statement is important.

Querist : Anonymous

Querist : Anonymous (Querist)

10 June 2014 Dear Sir,

Could you please clearly explain stale cheque's process.

thanks

Sandeep Dharar

Sandeep Dharar (Expert)
Follow

10 June 2014 There is a concept called as stale cheque. A cheque is invalid or stale if it is not presented to the banker within 3 months. If this is the case the drawer of the cheque will reverse his bank payment entry. Now here is the problem. Mr.A pays a cheque to Mr B. Mr.B deposits it in his bank and get the funds transferred. The catch is that the banker has transferred funds from some other parties account into Mr.B's account but Mr.A does not know tat and neither does the banker that he had made a mistake. So when Mr.A prepares his BRS he reverses the cheque paid to Mr.B since it has not appeared in the bank statement. My doubt is that Mr A has discharged his liability already he just does not know that he has already done it. So should he reverse the payment made to Mr.B? or show as though payment is made?. The reason i am asking this question is that BRS can identify the differences. It cannot identify the cause for the differences. So in this event what should be the accounting treatment? and what control measure can i use if such a fiasco takes place? and for preventing such an event?

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now