Accounting entries

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CA P KARTHIKA

Chartered Accountant

715 Points Posted on 06 May 2009

Hi to all!!!

As per accounting concepts we should account all incomes and expenditures as it occurs without any setting off of income against expenses or vice versa..

For eg: for sale of an asset -BV-4200, SV-4000,

we pass the entry as:

Cash/Bank a/c dr 4000

Loss on sale a/c dr 200

To asset a/c 4200

Well this treatment is correct.

Similarly I have a doubt! For instance Bank has charged his client wrongly and later finding out the mistake again credited it in the client's a/c. Like total Bank charges are Rs.1000 and wrongly debited bank charge now credited is Rs.100/-

1. Can the Client Pass entry only for Bank charge and credit of Bank Charge? OR

2. Can the client pass entry with setting off income from total Bank charges?

(a) Bank Charges a/c dr 1000

To Bank a/c 1000

(b) Bank a/c dr 100

To miscellaneous inc a/c 100

To Bank A/c 900

Can the client pass (a) and (b) or only (c)

Which is correct? Support your answer relating to accounting concept!!!!

Replies (2)

Guest

1) On sale of an asset will be accounted on WDV value only

your entry is right but the loss was debited to a/c Loss/Profit on sale of fixed assets'

in case there are a Deperaciation Reserve account maintained in books the entry make as follows

Bank/Cash A/c Dr (from value realised)

Loss on sale of Fixed Assets A/c Dr. (Diff in value realised and WDV value of Fixed Asset)

To Depreciation Reserve A/c (Depreciation value which was earlier dr to this a/c)

To Fixed Assets A/c (Book value)

2) If bank refund some bank charges you have to credit the amount to bank Charges a/c there are no need to credit this amount in the Income as the same is a refund ag expenses not additional expenses

Bank Charges A/c Dr. 10000

To Bank 10000

on the time of Refund :

Bank A/c Dr. 2000

To Bank Charges 2000

>> Rajesh