Treatment rent paid chq uncleared

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Querist : Anonymous

Querist : Anonymous (Querist)

31 July 2011 Dear Sir

Chq issued in the Fy 2010-11 for rent paid, but chq is not cleared on 31/03/2011.

we came to know that chq is not presented in the bank till date and party is not going to present the chq.

My query is we have debited rent paid in FY 2010-11
Now in present FY 2011-12 what is the treatment.

for the FY 2010-11 Finalization of accouts is done.

Thanks in Advance

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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31 July 2011 Since Rent related to FY-2010-11 only, so you book the expenses and keep the cheque in Bank reconciliation as uncleared cheque, in case the party not deposited the cheque up to the validity period reverse the payment entry and credit the party account untill the rent is paid further

Querist : Anonymous

Querist : Anonymous (Querist)

31 July 2011 There is no party a/c created.

Payment Entry is made as mentioned below.

Rent Piad DR
Bank Credit Cr

What is the treatment.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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31 July 2011 No problem you create the party ledger in current year and reversed the same to the party account mentioning the rent cheque is not deposited by the party. Since the expenses already incurred previous year, Rent account cant be reversed.

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