Naga Praveen (Chartered Accountant) (304 Points)
06 April 2010What shall I do if a cheque issued not presented for payment within 6 months? What about that Liability? Am I still liable to pay even after the 6 months period?
As per current negotiable instruments practices, a cheque is valid for only 6 months. After 6 months , if its not presented you have to reverse the entry which you have passed earlier. The entry passed by you earlier was:-
Creditor A/c Dr.
To Bank A/c
Now when cheque is not presented your liability arises again. Now you have to reverse back the entry in order to give life to creditor A/c and raise a fresh liability.....
Hope you understood.
Gajendra R. Tiwari
(Senior Manager-Accounts & CA IPCC Student)
(429 Points)
Replied 06 April 2010
Agreed.
Ratan Deep Saxena
(Asstt Manager (Accounts & Finance))
(2998 Points)
Replied 06 April 2010
A Cheque is valid upto a period of 6 months only. You cnt deny your liability after the said period of 6 months if still party not presented the cheque to the bank.
You hv to reversed the entry as
Bank A/c Dr
to creditors A/c
(Being Amt reversed due to cheque expire)
regards,
ratan
Santhosh Poojary
(SIEMPRE AHÍ PARA TI)
(15607 Points)
Replied 07 April 2010
nice clarifications..Thanks
sivaram
(Asst Mgr-Taxation)
(6918 Points)
Replied 07 April 2010
cheque has become time barred but liablity still exists reverse the original entry passed and account for the fresh payment issued
Raj Saxena (1412th Tiger)
(Struggling Student)
(272 Points)
Replied 07 April 2010
| Originally posted by : Faiz Ahmed | ||
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As per current negotiable instruments practices, a cheque is valid for only 6 months. After 6 months , if its not presented you have to reverse the entry which you have passed earlier. The entry passed by you earlier was:- Creditor A/c Dr. To Bank A/c Now when cheque is not presented your liability arises again. Now you have to reverse back the entry in order to give life to creditor A/c and raise a fresh liability..... Hope you understood. |
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