Outstadning liability in previous year balance sheet

Am amount is shown in last two year balance sheet as outstanding liability towards X firm.

Outstanding AMC charge F/Y 20-21 Rs1000000

How to reverse the entry  in current F/Y (23-24)as liability no longer exists.

Replies (4)
Quick Summary
This discussion addresses how to correct an outstanding liability for AMC charges that incorrectly appeared on balance sheets for FY 20-21 and 21-22. The liability never truly existed and needs to be removed from the current FY 23-24 balance sheet without affecting the P&L. Several methods are suggested, including reversing the original entry, crediting a gain if the creditor is bankrupt, or using a suspense account if the original transaction cannot be traced.

Dr. Liability

Cr. Bank 

If the payment is met. 

If the other msme creditor went bankrupt as a result of this outstanding liability

Dr. Liability

Cr. Gain 

 

Reason of reversal of entry or how it becomes nil.

Can specific journal entry be mentioned.

AMC amount o/s in Balance sheet 31 Mar 21 and 31 Mar 22

what entry to make to now so that it does not reflect on 31 Mar 23 Balance sheet.

The liability never existed and was wrongly shown, debited in P and L accounts and Balance sheets earlier.

Without a compensating entry, the balance sheet doesn't tally. So try and trace the transaction. Then reverse the entries. 

Next, if you can't find that transaction

Dr. AMC liability

Cr. Suspense account

Until Then

Payables is usually associated with equity or income statement. So start searching from there.

If you still can't find it

Dr. Suspense 

Cr. Foregone payments (or create your own head or use company act schedule) 

 

 

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Related Topics :

Loading
Company
ARTICLESHIP 01 October 2026
Articled Assistant

KPSN & Associates LLP

Chennai

CA Inter

View Details
Company
Featured 03 October 2026
Accountant

A P Lodha and Associates

Jalna

B.Com

View Details
Company
ARTICLESHIP 15 September 2026
Freelance Taxation Content Writer Intern

Interactive Media Pvt Ltd.

New Delhi

CA Inter

View Details
Company
Featured 11 September 2026
Audit Executive

RBSM Corporate Advisors Private Limited

Pune

CA

View Details
Company
17 September 2026
Chartered Accountant

Dass Gupta & Associates

Gurgaon

CA

View Details
Company
ARTICLESHIP 28 September 2026
Junior Accountant

J S P M & Associates LLP

Pune

B.Com

View Details
Company
20 September 2026
Semi Qualified CA

Navin & Associates

Mumbai

CA Inter

View Details
Company
ARTICLESHIP 18 September 2026
Industrial Trainee

Twenty Point Nine Five Ventures Private Limited

Noida

CA Inter

View Details