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cheque bounced from party and cheque recd in another name

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This query is : Resolved

preeti (Querist)

12 November 2009 If a cheque has been received from the party say A, and then the cheque got bounced.Now the party issued a cheque in another's name say B. The cheque has been entered in the books with a new account B. B's account is showing credit balance and in A's account the bill had already been raised which is shown as outstanding. How the adjustment can be made. If the entry is made as

B Dr.
To A

is this correct. What should be the narration?

shakuntala chhangani

shakuntala chhangani (Expert)

13 November 2009 Hi Preeti, when cheque is received from A,you must have passed tthe entry:
Bank A/c Dr
To A's A/c
upon cheque getting bounced, you must have reversed the above entry. Now, A again gives u a cheque. u must not be concerned about whether it is given in B or C or D's name as uknow only A and not to these parties(remember endorsement of B/R.?)so ur entry should again be same as 1st above.but if u have already passed the entry as:
Bank A/c Dr
To B,s A/c
then u need to rectify it,debiting b's A/c n Crediting A's A/c.Thanks and regards,
CA Shakuntala Chhangani

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