A/C Entries

TDS / TCS 1379 views 8 replies

Geetha.K

Accountants Officer

118 Points Posted on 23 February 2008

Hi,
I have one doubt , see

A/C no 1 is Current A/c :
A/c no. 2 is OD A/c : ok

Bank people taken the interest on loan from 1 to 2 ,after that they reversed the same. But they showed only in current A/c and no entry in OD A/c.

When I joined I noticed it everyone but nobody cares it. At last I explained it to one retired Bank Manager. After rectification he found , it's bank's mistake. and its loss to bank .i.e around 12 lakhs.

The Co. did the same thing like bank people while passing the entries in Tally .They passed the receipt entry i.e interst on loan to 1.to Acually we should pass A/C 2 to 1 right ?

Is it wrong ? What entries should I pass ? If I correct that entry I can't reconcile the bank statement.

If they did the mistake why we should do the mistake ?

With regards
Geetha

Replies (8)

CA. Dashrath Maheshwari

TaXpert

15126 Points Posted on 23 February 2008

No, you can't credit interest to CC a/c without debiting it by the bank. but you should make a journal entry of the interest amount for the interest due for payment in that od a/c, so that whenever the bank will debit your a/c by the interest, you will adjust it with the entry already passed by you.

Ashish Ranpara

TAX CONSULTANT

369 Points Posted on 23 February 2008

S.Srinivasaraghavan

Chief Financial Officer and Co

11318 Points Posted on 24 February 2008

If the current account has a credit balance, there is nothing wrong in the bank debiting that account with interest on OD. You have not explained how the bank lost Rs 12 lakhs. As far as the client is concerned, it is enough if he creates a provision account for interest on OD. As soon as the bank debits him with the interest, he can transfer that amount from the provision account

CA. Dashrath Maheshwari

TaXpert

15126 Points Posted on 24 February 2008

thanks ashish for the Secondment

Geetha.K

Accountants Officer

118 Points Posted on 25 February 2008

Drear Sir.

Thank you very much. It solved my problem.
Please keep in touch. Because I have many quaries.

Geetha.K

Accountants Officer

118 Points Posted on 25 February 2008

Dear Srinivas
The problem is , when they reversed the interest on loan amount that is from loan A/c to current a/c ,the amount should reflect on both a/c right ? But they showed only in current A/c not in loan A/c. Then it's a loss to Bank right ?

S.Srinivasaraghavan

Chief Financial Officer and Co

11318 Points Posted on 25 February 2008

Dear Geetha,
Can you please list the entries actually passed by the bank in order to have clarity? Surely they must have done it in double-entry book-keeping principle! Otherwise the books would not have been balanced.

CA. Dashrath Maheshwari

TaXpert

15126 Points Posted on 25 February 2008

Dear Geetha, If they recovered the interest from current account then no need to touch the principal amount of loan account, therefore there is no loss to bank...