1 bank account was not shown in the Balance sheet of a proprietary firm for last 5 years. This year however, bank has deducted TDS on interest received on the bank account thereby reflecting the bank account in 26AS. How do we introduce this bank account in the financials? What would be the journal entries for the same?
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Old bank account to be introduced in financials
Replies (5)
Not good practise.
By the way what's the balance in the missed bank acc?
You should account as Prior Period Item as per AS-5
add old bank account by entry
bank a/c dr.
to capital a/c
narration- bank account adjusted.
| Originally posted by : CA.Vinita Gupta | ||
 |
You should account as Prior Period Item as per AS-5 |  |
Hi Vinita, Thanks for the reply
AS 5 requires recording Prior period items in Profit and loss account. However, in the query listed above, we have to introduce the bank account as an asset in Balance Sheet.
If the bank has balance and interest is earned you will need to account that too
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