suppose Mr X is creditor of a company.He receive a sum amount of RS 10 thousand in cheque.
I enter in my company a/c as
Mr x a/c Dr 10,000
TO particular Bank A/C
but some how he didnot present the cheque at bank till the expiry of the cheque
so what i do for this
if i reverse the entry he will be a creditor of the company.
case-1, if he claim the amount it will be adjusted by issue of new cheque
case-2 if he not claim wht will i do.....??????
you are right that you have to reverse the entry.
And yes he will become a creditor again and you have to issue a new cheque.
you should show it as creditor till he claims.
ashish ji,
if the creditor not claim again what will i do
IF U REVERSE THE ENTRY THEN HE WILL NOT BECOME A CREDITOR AS NO CASH or BANK BALANCE HAD CAME FROM HIM ,SO HIS A/C WILL BE CLEAR....
cheque issued and same is not realized in the bank till 6 months. u need to reverse to party acounts .....even till 3 yrs if he has not calimed ....than u have to reverse to the expenses
Balu ji,
then wht entry will be done for this
again expense under which head will i show it
and give the entries for this
Just make a reverse entry after the expiry of specified period.
And when u sure that the amount will not be claimed by the creditor pass the entry:-
Creditor A/c Dr.
To P&L
I don't think that in subsequent year any current year expese will be reversed bacause the expense against the party had occured in some previous year.
You can always credit the reversal to your profit and loss account and title it as 'balances writteb back'.
You can show it under your income or also credit it to the relevant expense head. If you do it the first way, u wil have better control
Credit in stale cheque account and debit bank account. when creditor comes for revalidation of cheque debit stale cheque account and credit bank account instead of reversing in expenses account.
Sir, In another side if loss by sundry debtors, we are making provision for Bad debts. Then when i got benefit from creditors..., is the possible to adjust the abive bad debts from benefit from the creditors side. please reply.......?
A very good method is to keep a clearing a/c for bank tranacations.
CAclubindia
