Doubt

There are two sister concerns. A pays to B for the electricity charges as it uses the electricity which is supplied from the Electric Meter which is in the name of B. A records all the bank transactions as and when the cheques are given. But B records the bank tranasction as per the bank statement. 

A gave a cheque to B on 21st of March which came into the bank statement of B in April 2012. Now my question is how should I tally the balance of Sister Concerns A and B?

Replies (4)

The difference amount will be shown as Cheque-in-transit for B, i guess so not that sure.

Why shud the entries be recorded as per the Bank statement. As and when the cheque is  received, it can be entered in the books. Bank reconciliation statement will take care of the rest.

Now, as in the cited case,  A will remain a debtor in the books of  B as on 31.03.12

Entry  made will be :

For booking :

A  a/c.  Dr.

       To   Electricity chgs  (income)   a/c.    

 

On receipt of payment (in April 2012) :

 

Cash/Bank          A/c. Dr

    To A a/c.                   Cr.

 

And in A's books B  will no more  be a Creditor for that transaction.

Both methods are correct in small size organisation.But normaly as soon as cheq.issue entry is passed in the books.

It reflects in BRS che.given but not presented & bank balance automaticaly tally.

second thing on the receipt of che.no one can enter ,but in depositing the che.in to bank receipt entry should be pass.

same thing in BRS che.deposited but not clear bank balances automaticaly tally.

 

You can show it as Cheque in hand...

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